With the current economy, many people find themselves unable to afford new vehicles on their own, which is why a number of individuals are turning to car loans. A new report is showing that more people may be looking to get back to spending despite the economic slump the nation faces.
According to Equifax’s most recent monthly report, auto loan originations have the potential to be consistent with levels prior to the recession of 2008. Between January and June 2011, new auto loan originations were up by 15 percent from last year, which analysts are taking to suggest that the industry is continuing its growth.
Key findings in the year over year report showed that less than 10 percent of loans were to borrowers who had an Equifax Credit Score of below 600. Additionally, 25 percent of loans from automotive financial companies were given to people with a similar Equifax credit score.
In terms of automotive loans for luxury vehicles, which are worth more than $40,000, the number of borrowers increased pre-recession levels of that of June 2007. However, the total amount of new loans lagged behind the 2006-2008 timeframe, but analysts were still pleased with the 17 percent increase from last year. While there were 9.6 million loan originations between January and June of this year, pre-recession totals saw upwards of 10 million during the same time frame. The lowest instance of auto loan originations was between January and June 2009, which only saw 7.5 million new borrowers.
The amount of new loans for June was the second-highest total in 2011 at 1.7 million. It was edged out slightly by March of this year with 1.8 million.
Analysts of the data are hopeful that if these kinds of loan levels continue, the sector may be able to bounce back to where it was before the recession by the end of the year.
“Auto lending continues to be one of the most promising lending sectors today based on the data,” said Michael Koukounas, senior vice president of special client services for Equifax. “If this momentum can be maintained through the remainder of the year, 2011 year-end totals should reflect a comparable return to normalcy to pre-recession lending levels.”