In a new report, large credit corporation Equifax is indicating that American auto loans are on track to stay above pre-recession levels. With loan originations at their highest point in three years, Equifax cites an 11% increase year-to-year during June and shows that numbers for the first half of 2011 were inspiring, with a total average increase of 15% for January to June 2011, versus the same time period in 2010.
Another thing that Equifax found is that dedicated auto finance companies are opening up their books to auto loan applicants with lower credit scores. This is in contrast to banks, credit unions and other broad-spectrum lenders who are usually holding the purse strings more tightly. This makes sense, since captive auto finance companies have a lot more skin in the game and understand the need to widen the customer base for their respective brands. Banks, on the other hand, often tell customers that they’re “not really in the business” of auto lending in order to justify higher interest rates for these deals.
Equifax found that auto finance companies have been lending to borrowers with credit scores below 600 much more than other lenders. We’ve seen some evidence of this as more specialized lenders realize that so many Americans have drifted into the “subprime” category that it no longer makes sense to shut them out when there are so many cars to move off of American lots.
In general, Equifax staffers are optimistic about the future of American auto lending. A recent press release cites Equifax Senior Vice President Michael Koukounas as maintaining that 2011 sales “should reflect a comparable return to normalcy and pre-recession lending levels” barring any sudden shift in the trade winds through the fall.
When it’s time to go to the dealer’s lot and look for a newer late moderate vehicle, those who want to finance some or all of their purchase can benefit from knowing more about the overall auto loan market at that particular time. It always helps to shop around to different lenders, but knowing where the best deals are can also make a difference. Keep an eye on upcoming reports about who is offering better car loan deals to your particular borrowing demographic, and you’ll be able to drive away from the lot with less debt.