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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.

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Car dealership in Miami

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.

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