#AutoLoans
Americans Loving Their Leases, Not so Much Their Loans
Good times have clearly arrived, because Americans are flinging money at cars like it’s going out of style.
Leasing has never been more popular for American car buyers, reports the Detroit Free Press, and the size of their auto loans have also reached record territory.
Auto Loans Top $1T; Sub-prime Loans Grow 10 Percent Over 2014
Credit-reporting agency Equifax says that as of June 2015 more than $1 trillion has been loaned or leased in the United States. The total dollar amount is 10.5 percent higher than last year.
The average loan amount is $20,800, which is a 3.65 percent increase over last year, and the average sub-prime loan is $18,200. Sub-prime loans comprised 23.5 percent of newly originated auto loans.
More than 9 million new loans were made up to April 2015, which is a 5.8-percent increase over last year. Overall, more than 73.7 million cars are financed through loans in the U.S.
Wells Fargo Places Cap On Subprime Loans
Wells Fargo will rein in its subprime lending business, limiting subprime car loans to 10 percent of auto loans it originates. According to the New York Times, the move comes amid concerns that the market for subprime car loans is expanding too quickly.
Repossessions, Delinquencies Up As Oustanding Auto Loan Balances Hit All-Time High
The latest Q2 2014 data from Experian was released this week, and key metrics like repossessions, loan delinquencies and outstanding balances have all seen increases.
Honda's Sales Chief Warns Of "Stupid Things" As Accord, CR-V Top Retail Sales Charts
In this year’s red hot new car market, the Honda Accord and CR-V have apparently captured the top spot in both new car and SUV retail sales through the first half of 2014, according to Polk registration data. But John Mendel, Honda’s head of sales, had some pointed words for the industry as a whole, and the state of the American auto market.
Santander Consumer Receives DOJ Subpoena
Following GM Financial’s subpoena from the Department of Justice, Santander Consumer said that it had received a subpoena as well related to
“production of documents and communications that, among other things relate to the underwriting and securitization of nonprime auto loans since 2007,”
Outstanding Subprime Loan Balances Hit 8-Year Highs
Buried in a feel good story about auto loans comes the news that subprime auto loans are at levels that we haven’t seen in nearly a decade.
The New York Times Shines A Light On Subprime
The issue of subprime car loans, specifically loans with exorbitant interest rates for used cars, has filtered into the New York Times, with the paper’s Dealbook section running an investigation into the practice.
OCC Warns Of Auto Lending Risk
The Office of the Comptroller of the Currency, a government entity that regulates and supervises banks, is sounding the alarm regarding risks related to auto loans.
No Credit Score? Show Your Cable Bill, Get Approved
New technology is allowing buyers with no credit score – due to a lack of credit history or a personal bankruptcy – to get vehicle financing via examination of documents like the payment history of their cable or cell phone bill.
Record Auto Loans Taken As Interest Rates Drop
Though the calendar is about to change to 2014, it appears to be 2007 all over again in dealer lots and showrooms nationwide as a record number of auto loans with low interest rates were signed during the third quarter of 2013.
Moody's: Auto Loan Standards Will Be Relaxed in 2014. Leases to Increase As Prices Climb
According to Moody’s Investors Service, increased competition for issuing auto loans will result in lenders taking greater risks and lowering underwriting standards. “ Auto lenders will continue their return to higher levels of risk-taking, a trend that emerged in 2013 and will gain momentum in the coming year,” Moody’s analysts Jeffrey Hibbs, Mack Caldwell and William Black wrote in a report published Monday. Greater competition between lenders will result in “ever-more generous loan terms,” they said.
As the economy has slowly improved, losses on vehicle debt are down across the board, regardless of creditworthiness, compared to historic norms. That fact and continued low interest rates are attracting lenders into the car loan market.
Mainstream Press Finally Worried About Cheap Car Loans
Months after TTAC started to relentlessly bleat about the glut of money flowing into the auto loan sector, the mainstream media is finally taking notice. Automotive News is finally expressing some worry over the factors that we’ve been discussing for some time: car loan terms are getting longer ( to help keep payments low), subprime lending is increasing and an expected rise in interest rates could put an end to the new car market’s exuberant performance.
Fed Reports Auto Loans at Six-Year High, Average Balance Up, Delinquencies Down
According to a report issued last week by the U.S. Federal Reserve Bank of New York, car and light truck loan originations have reached a six-year high. Automotive News reports that for the second quarter of 2013, new loans went up 11% to $91.8 billion, including consumers with all credit ratings. U.S. light vehicle sales were up 9% for the quarter from last year.
The Fed said that the biggest year to year change was in the 621-660 credit score range, just below “prime” rankings. That tranche rose 16% to $12.1 billion. Loans to those with worse credit, a score below 620, were up ~11% from 2012 to $21.2 billion.
97 Months And Running
8 years to pay off a car? A report by the Wall Street Journal claims that in Q4 of 2012, the average car loan stretched out to 65 months, or just over 5 years. Loan terms were being stretched out over increasingly longer terms too, with credit firm Experian reporting that nearly 1 in 5 car loans had terms between 73 and 84 months long, with some stretching for as long as 97 months.
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