More good news on auto loans

[Apr 4, 2012.]

 

The National Automobile Dealers Association (NADA) held its annual convention over the weekend, and almost none of the delegates attended any of the sessions at the four-day event.

That's probably not actually true, but the only thing more likely to put delegates off attending working sessions than scheduling a convention over a Super Bowl weekend is hosting it in Las Vegas. And guess where NADA located its shindig.

Delighted dealers

One thing's for sure, the people attending were likely to be in a party mood. The Detroit News sent along a journalist, who peppered his report with words like upbeat, confidence, and good outlook. A few of the points it contained included:

1. Between 2008 and 2011, new car prices leaped to $28,341 from $25,500.


2. Over the same period, the value of incentives fell to $2,680 from $3,018.


3. The average credit scores of those being approved for new-car auto loans declined last year, as lenders have rushed to welcome people with poorer credit.


4. There were 17,538 dealerships nationwide at the end of 2011, down from 17,698 a year before, about 25,000 in 1988, and and 47,500 in 1950.

The News also quoted industry insiders who expected auto sales to jump this year to something between 13.5 and 14 million units. This was borne out by The Wall Street Journal on Feb. 5 when it quoted NADA chief economist Paul Taylor as predicting 13.9 million unit sales in 2012, broken down as seven million trucks and SUVs and 6.9 million cars. That 13.9 million total is up from 12.7 million last year, a rise of very nearly 10 percent.

Auto loans have an Ally?

As observed on this blog recently, there's little doubt that many of these additional sales result from the wider availability of cheap auto loans. If you don't believe that, just think back a couple of years to when the scarcity of finance so seriously undermined light vehicle sales.

One company that's among today's pacesetters for vehicle lending is Ally Financial, and on Feb. 3 it issued a press release that boasted about the remarkable growth during 2011 in the loans it wrote. One nugget contained in that document was the revival of the used car market. That year, the number of new cars, trucks and SUVs that Ally financed jumped 27 percent, while the number of auto loans it approved for used vehicles soared by 90 percent.

Auto loans a good bet -- for lenders and borrowers

Much of the reason for the growth in the businesses of companies like Ally is the much better behavior of consumers when it comes to making payments. At the end of last month, Equifax, which is one of the big credit bureaus, released data that showed that the rate of auto loans that are 60 or more days past due plummeted by 19 percent last year.

If you're planning to join the growing number of people who are changing their cars, be sure to do yourself one favor: before you visit your dealer, check out quotes for cheap auto loans online.

 

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.