New data from a major credit research company shows that auto loans are becoming a bigger part of the American market, with a substantial increase that brings overall lending for car financing back to “pre-recession levels.” Equifax, one of the three major credit agencies, has announced that the first quarter of 2011 brought 87 billion dollars in American car loans, a gain of 20% from Q1 of 2010, with March 2011 numbers at around 33 billion. In its National Credit Trend Report, Equifax shows how the auto sector is coming back, as other parts of our economy continue to flounder. The recent numbers are higher than anything seen since 2008, even in 2009 when consumers could take advantage of a little more seed money for an auto loan with the government’s “Cash for Clunkers” program.
The Equifax report also shows consumers a little more about what the average car loan borrower was paying in March: estimates of average loan amounts and payments can help new or used car buyers figure out where they stand when inking a car loan deal. Equifax cites an average of around $18,500 for car loans originated through banks and credit unions, with just over $19,000 for the average deal through an auto finance company. For new car buyers, monthly payments for loans made through a bank or credit union are also slightly cheaper than those from auto finance companies, with averages of $366 and $397 respectively. These numbers are both down from March of 2010, which indicates that even with supply issues dogging the general auto market, and many lenders skittish about reaching out to the growing “sub-prime” crowd, there are still deals to be had in financing a car.
Use these numbers when you go to the dealer’s lot, or when you are calling up a third party lender, and do appropriate research to make sure that you get the auto loan that you deserve with the lowest interest rates and fees possible. Some dealers and other lenders will use a kind of carrot-and-stick approach with the implicit threat of loan rejection to get borrowers to agree to higher interest rates or extras tacked onto monthly payments. Stand your ground and know your credit score, as well as the current prime lending rate, and your trade-in value, to keep debt off of your plate when financing a new or used car.