Cheap Auto Loans Behind Detroit's Need to Gear Up

[Jun 6, 2010.]

 

Detroit Not Poised to Meet Demand?

When Fed chairman Ben Bernanke visited Detroit June 3, one thing in particular was bothering him. Car sales are beginning to boom again and Chrysler, Ford, and GM are meeting demand. But can they cope if those sales keep increasing?

The problem, reported in the Detroit News, isn't with the big-three themselves; they now seem to be on top of at least some of their problems. No, the trouble is among the many small businesses that supply the giants. They've been starved of the credit they need to maintain capacity, or in some sad cases, to stay in business at all. Help may be at hand in the shape of a $30 billion program that is intended to give small businesses access to the help they need. But that initiative is still with Congress and some worry that it's too little, too late.

Cheap Auto Loans Fuel Demand for Cars

The recovery in sales is continuing apace, largely on the back of the greater availability of auto loans. Every month, Ward's publishes its survey of U.S. light vehicle sales, and it's May figures show remarkable growth. In total, Americans bought 1,101,017 cars and light trucks that month. That compares with 923,830 in May 2009, an increase of 19.2 percent.

Not all the news in the Ward's report was good. The majority of units sold were made by foreign manufacturers and Detroit's share of the market increased by only 1.1 percent, from 46.4 percent to 47.5 percent. True, that's heading in the right direction, but--especially given Toyota's well-publicized problems--you might have hoped for better.

Auto Loans Flourishing

The auto loan business is continuing to flourish. Much of the reason is that lenders are encouraged by the increase in loans with fewer problems. TransUnion, one of the big credit reference agencies, recently revealed:

The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) fell 18.52 percent between the fourth quarter of 2009 and first quarter of 2010 to 0.66 percent, according to a TransUnion quarterly analysis of trends in the auto industry. The year-over-year delinquency rate at the national level fell by 20.48 percent in the first quarter.

It's those sorts of figures that are probably behind General Motors' decision, reported last month in USA Today, to get back into the auto loan business. A day later, Reuters said that Chrysler was reviewing its auto loan options.

Cheap Auto Loans and You

If it's time for you to trade in your car, you can get quotes for cheap auto loans online and a fast loan decision regardless of your needs.

 

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.