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Auto loans news roundup

[Feb 16, 2011.]

 

Cheap auto loans still getting cheaper


At the end of January, auto loan rates were exceptionally low. Just how low, however, may be more of a surprise. Rates offered by big banks and thrifts were believed to be the lowest on record, according to automotive industry information company Edmunds.com. Providing car buyers with the perfect double whammy, the National Automobile Dealers Association says trade-in values are up.


Auto loans provider turns around profitability


Ally Financial Inc. (formerly GMAC), a huge provider of auto loans, went back into profit to the tune of $79 million during the fourth quarter of 2010, according to a report in The Wall Street Journal. Ally really suffered during the downturn, posting a $4.95 billion loss as recently as the fourth quarter of 2009. So Ally's recovery has been truly dramatic.


Just how dramatic can be seen by the volume of auto loans Ally made to Americans. Those jumped to $9.3 billion in the fourth quarter of 2010, up from $5.9 billion for the like period a year ago. The turnaround was "fueled by higher revenue as improving credit and steady prices for used vehicles boosted the value of its loan book," according to The Journal report.


By the way, Ally's results are good news for all Americans. Since its rescue during the credit crunch, Ally/GMAC is majority-owned by the government.


Americans' increasing creditworthiness


More evidence of Americans' improving ability to meet financial commitments came from the Feb. 15 release of S&P/Experian Consumer Credit Default Indices. These showed major improvements in default rates across all categories of consumer credit. With a default rate of just 1.57 during January, auto loans did particularly well. The default rate for bank cards was 6.13 percent and first mortgages were 2.84 percent.


"We continue to see improvements in consumers' financial condition,'' said David M. Blitzer, managing director and chairman of the S&P Index Committee. "Two keys to the economic recovery are rebuilding balance sheets and increased spending. The reduced default rates seen here demonstrate that household balance sheets are being put back into shape and should support gains in spending."


Cheap auto loans for you


So, to sum up: auto loans are cheap, trade-in values are high, and more and more Americans are borrowing because they can afford to make the necessary payments. If you haven't gotten around to changing your vehicle recently, perhaps now's the time to think about it. Your first step is to find competitive auto loan quotes.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.

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