The changing face of automotive financing
Posted on Tuesday, April 26, 2016 at 2:37:08 PM
The automobile manufacturing and used car industries have been booming in the past few years, much to the delight of economists, consumers and government officials across the United States. However, automotive financing trends are not only moving in a more prolific direction, but a more diverse one as well, as the behaviors of consumers continue to shift in the midst of the economic recovery.
Right now is a good time to get financed on a new or used automobile thanks to low rates and a greater willingness among lenders to disburse funds to consumers than has been seen since before the recession. Thanks to the diversification of the market, applicants will have a range of options available that will fit their specific needs and preferences.
A look inside
Experian Automotive released the results of a new study that found consumer behaviors are certainly shifting when it comes to financing acquisition, and that it is changing the face of the market itself. For example, the analysts found that 76 percent more leasing contracts have been signed to finance brand new cars, specifically, since the beginning of the recession. This is likely to have an impact on the vehicle sales situation this year, with an estimated 1.8 million automobile leasing agreements coming to a close.
With such a large volume of vehicles coming back into the market, consumers, dealers and lenders will want to better understand the options available to them so they are able to take action," Experience Senior Director of Automotive Finance Melinda Zabritski explained. "Whether it is deciding to lease again or buy used, restocking inventory or marketing to potential borrowers, gaining insight into these trends will provide the knowledge necessary to make smarter decisions for all parties involved."
The impact of this trend will likely be clearer by the end of this year.
Lending on the rise
Ward's Auto reported that a survey from Experian found that more than 50 percent of lenders are planning to disburse a higher volume of financing plans and loans to borrowers this year. Another 24.4 percent expected the value to be about the same, while the source noted that the market is expected to exceed $1 trillion this year.
Local community banks are often more preferable than larger, national ones when trying to get financing for an automobile.