With strong car sales, rising car prices and low interest rates, Americans managed to owe a record amount of $1 trillion in car loans, the first time the amount has been reached in the country's history. With the automotive industry set to sell a record number of cars in the U.S. this year, new car sales figures are up 6 percent, according to Fox 28 News.
Jason Laky, automotive business leader at credit agency TransUnion, the company that came up with the data, believes that financing has become quite attractive for the average American car buyer. Borrowers with top credit scores can get loans for less than 3 percent. "There are a lot of lending choices for consumers, a lot more competition. That's made financing more widely available and very attractive," he said.
The amount owed by American car buyers is up 11 percent, which is attributed to the rising prices of automobiles. With new car prices averaging $32,529, the average borrowed amount is about $21,700. According to the TransUnion study, the average car loan balance is rising faster than mortgage loans, reports CNN Money.
Low interest rates and longer loan terms are one of the key aspects of the trend, with the average payment for vehicles standing at $400 a month.
Other statistics are quite positive too, with only about $9 billion, which is just about 1 percent of the total loan volume, being labelled as past due. Car loan delinquency rates are even better than those of mortgages and credit cards.
In fact, most American car buyers have pretty good credit, with subprime loans only making up about 15 percent of the total loan volume.
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