The Federal Reserve introduced a $200 billion program Tuesday to help lenders make credit available for car loans, student loans, credit cards and small business loans.
The program is designed to boost consumer credit, an area of the economy that is struggling badly right now. The Fed said the $200 billion program could generate up to $1 trillion of lending for businesses and households that desperately need credit, which is the lifeblood of the economy, reports the AP.
"We should see immediate benefits" from the program, Fed Chairman Ben Bernanke told Congress Tuesday.
The new program, called the Term Asset-Backed Securities Loan Facility (TALF), was first announced late last year and originally scheduled to start in February. Funds could be available as soon as late March.
Here’s how it will work. The Fed will buy securities backed by different types of debt including credit cards, car loans, student loans and small business loans. Participants — companies and investors that pledge eligible collateral to back the loan — must request the new government loans by March 17. The Fed will provide the first round of three-year loans on March 25, the AP reports.
Round two of the loans will be given out on April 14 and funding participants must request the government loans by April 7. The TALF program is slated to run through December but could be extended, the Fed said.
So if you’ve been denied for a car loan recently or have been waiting until the economy improves to buy a car, the money will now be available to lend to consumers. Lenders, especially smaller banks and credit unions, will have the funds now to help buyers get the car loans they desperately need to buy a car.
In addition to funds available for car loans now, buyers will also find the deals of a lifetime on car purchases.
Federal Reserve logo via feedomride.us.