More Loans Expected to Boost Auto Sales
US auto sales are expected to have hit a 30-year low of about 10 million when figures are released today. But partly because of loosening credit, analysts expect more than 1 million cars and light trucks to have been sold in December, the best monthly performance since Cash for Clunkers in August.
Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months, Experian Automotive says. Fourth-quarter figures aren’t yet available, but Jesse Toprak, vice president of the auto pricing tracker TrueCar Inc., said December saw an uptick in auto-loan approvals for consumers with average or above-average credit.
Paul Taylor, chief economist for the National Auto Dealers Association, said used-car prices also have stabilized due to limited supply, making used-car loans more attractive to banks.
Still, Toprak said, it could take a year or more for financial firms to trust consumers enough to return to normal levels for auto lending. Third-quarter auto lending was down 30 percent from the same period in 2006.
Today, a top-tier borrower can get a 36-month auto loan with an average monthly rate of 5.74 percent, down from 6.65 percent a year ago, according to Informa Research Services. But the cost has risen for people in the bottom tier: The average rate has climbed to 18.56 percent, from 16.47 percent a year ago.