Equifax Reports Growth, Stability in Auto Finance
Auto loan originations totaled 10.7 million for the first half of the year, the highest mark since 2007 when 11 million loans were opened, Equifax reports.
ATLANTA — According to Equifax's latest monthly National Consumer Credit Trends Report, automotive credit balances and new accounts are increasing steadily, with the number of new accounts opened in the first half approaching pre-recession levels.
Auto lending is gaining strength, reflecting increasing demand for new cars, the credit reporting agency said. On a year-to-date basis (through June 2012), total auto lending reached $207 billion, a 13.7 percent increase vs. a year ago. Additionally, the industry originated 10.7 million loans, the highest mark since 2007 when 11 million loans were opened.
Delinquency and write-off rates on auto loans and leases are well below levels seen at the start of the recession. In terms of dollars at risk, write-off rates in August 2012 accounted for one-third of what they were at the peak in March 2009 (2.1 percent versus 6.1 percent), while the number of auto account write-offs was about half of the peak volume (2.5 percent versus 5.2 percent). Write-off rates using both dollars and units exceeded 4 percent at the start of the recession.
"The average age of cars on the road today in the U.S. is the highest ever recorded, and consumers are ready to replace these older vehicles," said Equifax Chief Economist Amy Crews Cutts. "At the same time, the financial picture has improved sufficiently that we are seeing auto lending markets become facilitators rather than obstacles to meeting this demand, especially in the near-prime segment of the market that had all but ceased to exist during the worst of the financial crisis and recession."
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