Credit reporting agency Equifax recently released some interesting and revealing information about Americans and auto loans. According to the organizations, people in the United States owe a staggering $902.2 billion for their vehicles, which constitutes a 10-year increase over the total amount from a year ago as well as the highest amount in history.
There are some who are using the information to declare that the sky is falling, but according to Equifax such panic is unwarranted. The credit bureau says that the good news is that Americans are repaying their auto loans in record amounts. That means right now there is a record low for auto loan defaults. For three months running, less than one percent of people with auto loans have been seriously behind on paying. Still, it’s understandable why people are wary about any news of increasing consumer debt in any sector, considering what happened with the housing bubble at the beginning of the Great Recession.
All of this is good news for anyone who is looking to purchase a vehicle right now. Equifax says that with the record loan amounts, combined with the record low delinquencies, lenders are giving out some tremendous rates and terms on loans to qualified buyers. This means that getting a new car is easier and cheaper than it was a year ago. Considering that many Americans have been making due with aging vehicles, thanks to poor economic times, such news is quite welcome to many.
Of course, such good times cannot last forever. Possible threats to the current situation include an eight-year high for sub-prime automotive loans, a rate that looks to only be increasing for the foreseeable future, according to Equifax. In fact, about 28 percent of all new auto loans are sub-prime. One explanation for the glut of sub-prime loans has to do with many people during the Great Recession suffering damage to their credit profile as they lost houses, jobs, and more.