Strength seen in auto lending industry
Positive changes seen with auto loans
Positive signs are being seen in the automotive sector, with some conditions approaching pre-recession levels, Equifax said in a recent report.
According to Equifax’s latest monthly National Consumer Credit Trends Report, the number of new auto loan accounts and the total balance of those accounts are both rising. In fact, the number of new auto loans opened from January through June 2012 is at a level near seen in pre-recession times.
In the first 6 months of 2012, the total amount of auto loans rose to $207 billion, which represents a 13.7 percent rise over what was seen in the same time period a year earlier.
The number of new auto loans that originated during the first half of the year – 10.7 million – is the highest total seen since 2007 (11 million loans).
This gaining strength seen in auto lending, Equifax noted, signifies a rising demand for new cars. New car sales (includes cars and light trucks) rose almost 15 percent in the first 6 months of the year.
“The average age of cars on the road today in the US is the highest ever recorded and consumers are ready to replace these older vehicles,” Amy Crews Cutts, Equifax Chief Economist, said in a statement.
Cutts continued: “At the same time, the financial picture has improved sufficiently that we are seeing auto lending markets become facilitators rather than obstacles to meeting this demand, especially in the near-prime segment of the market that had all but ceased to exist during the worst of the financial crisis and recession.”
Auto loan delinquency decreased in the latest data, as did auto loan write offs by lenders.
According to Equifax, write-off rates seen in August 2012 are 66 percent lower than the rates seen at the peak in March 2009.
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