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Getting auto loans grows easier and easier

[Aug 29, 2011.]


If you're reading this because you're surfing the net looking for low-cost auto loans, you may think that you're not interested in what's happening in the car credit market generally. But perhaps you should think again. If you understand how investors and lenders are currently viewing the market for auto loans, you may find yourself in a stronger position to shop around for a better deal. Because, right now, borrowers are well placed. Here's why.

Fewer auto loan customers falling behind

First up, an August 23 report from TransUnion, one of the big credit bureaus. This found not only that delinquencies (people falling 60 days or more behind with their payments) for auto loans dropped between April and June of this year for the seventh quarter in a row, but also that they were running at historic lows. In a statement, Peter Turek, automotive vice president in TransUnion's financial services business unit, explained:

Historically, first- and second-quarter auto delinquencies tend to be lower than those experienced in the second half of the year--all other things remaining equal. However, over the last seven quarters--on a year-over-year basis--we have seen delinquencies trend downward as consumers continue to pay down debt. With auto sales improving, more auto loans are opened by consumers placing downward pressure on auto delinquency rates. A consumer's ability to repay is also helped by the recent low interest rates for new and used car loans, making purchase decisions and monthly payments more affordable.

Auto loans cheap and available

So TransUnion confirms we're seeing cheap auto loans, but Reuters reported on August 2 that they're also more widely available than they have been for a long time. It said that executives from Ally, one of the sector's biggest lenders, have expressed their wish to grow the number of used car loans the company offers. Their ambition is to increase the proportion of their business that these represent from 20 percent to 50 percent. And Reuters went on to quote Ally president William Muir, who called subprime auto loans "a very attractive business."

Ally isn't the only lender to see subprime auto loans in this way. Moody's, a giant credit ratings agency, has reduced by between 20 and 50 percent the amount it expects lenders to lose through defaults on auto loans that were issued in 2009 and 2010, according to the Structured Credit Investor website. Investors know that they're bound to incur some such losses as part of the price of doing business, so they're likely to be delighted to hear that those losses look set to be lower than expected. And that could well spur them to put yet more money into auto lending.

Quotes for auto loans

All of this means that lenders are much keener to lend on vehicles now than they have been for a very long time. So, if you're wanting to change your car, now might be the perfect opportunity. You can find quotes for affordable auto loans here on this site.


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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