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Is auto financing in a healthy place?

Posted on Thursday, May 26, 2016 at 8:55:12 AM

Rates and terms have been preferable in the auto financing market for years now, while demand for loans has increased significantly thanks to widespread economic improvements across most regions of the United States. At the same time, certain trends have sprouted up that give cause for concern regarding the longevity of this current automotive financing landscape, and some analysts are concerned about the level of debt that is amassing among consumers. 

Delinquencies rising
Bankrate recently reported that auto loan delinquencies late by 60 days or more increased by 1.12 percent between the first quarter of this year and the final one of 2015, and 13.1 percent compared to the first quarter of last year, citing data from TransUnion. According to the news provider, this was the first time that serious delinquencies was more than one percent in about five years, though it is still lower than the worst years of the economic recession at the end of the last decade. 

Delinquencies can be a major hindrance to auto financing across the marketplace, as more late payments will tend to push lenders in the wrong direction when it comes to disbursing more funds. However, Bankrate cited a comment from TransUnion senior vice president Ezra Becker, who stated that the current rate is still not all that worrisome when compared to historical data. 

In terms of total debt accrued, Credit.com reported that the latest data from Experian Automotive revealed that Americans now hold more than $1 trillion in outstanding auto loans. This particular finding is not all that negative, and is also not the first time the country surpassed the $1 trillion mark, the source noted, as it is a clear sign that lenders are approving loans and consumers are demanding them. 

No need to worry?
Business Insider contributor Matthew DeBord recently stated that the growing concerns about the auto finance bubble are not quite founded in reality yet, as car re-sale values are strong, re-financing products are widely available, and the economy is still in a healthy place. Regardless of the big picture, though, now is considered to be a good time to apply for an automotive loan given the preferable state of the lending landscape. 

Consumers who want to get a more personalized touch when looking for their automotive financing programs should consider applying with a community bank.