Study Shows Higher Credit-Risk Consumers Share Same Financial Optimism as Average Consumers
When it comes to optimism about the nation's financial future and its effect on personal spending, higher credit-risk consumers share the same economic outlook and attitude toward personal spending as most other Americans, according to a new study.
The study, sponsored by AmeriCredit Corp. and conducted by Market Facts, Inc., an independent research firm, compares economic and spending attitudes between the nonprime (higher credit risk) segment of the population and all American consumers.
One of the most striking findings of the survey is that 80 percent of nonprime consumers anticipate their spending habits will return to normal within a year.
This figure parallels the 81 percent of consumers in general who agree that a major economic turnaround is ahead within the next 12 months, according to the survey. Taken together, these numbers reflect that the American people are very optimistic about a financial recovery and are ready to demonstrate it with their pocketbook, according to Michael R. Barrington, chief executive officer of AmeriCredit.
"We feel it's especially significant that 30 percent of non-prime consumers already have returned to their traditional spending patterns," Barrington said. "Among consumers in general the number is 43 percent. This wave of consumer confidence is good news and points to better economic times ahead." Furthermore, Barrington said the survey dispels the belief that the recession has had a materially different impact on nonprime consumers.
While the nation has been confronted with terrorist acts, war in Afghanistan, corporate bankruptcies, layoffs and stock losses, 72 percent of nonprime borrowers are optimistic that they've weathered the storm and are "in control" of their financial future.
The general public is only slightly more optimistic, with 81 percent saying they are in control of their financial future, according to the survey.
"The survey shows nonprime consumers don't differ in any meaningful way from the general public in their attitudes about their financial future or future spending plans," Barrington said. "However, it does appear nonprime consumers place a much higher priority on making car and auto insurance payments in difficult economic times than the average American consumer," he said.
Some 85 percent of nonprime consumers said their mortgage or rent ranked first in payment priorities, while 67 percent said the car payment ranked second and 58 percent said auto insurance ranked third.
By contrast, 79 percent of average consumers said their mortgage or rent ranked first, followed by the car payment (41 percent) and auto insurance (39 percent).
Monthly credit card payments ranked fourth in importance with both groups.
Some 32 percent of American consumers in general felt that a clear end to the recession would make them believe life was back to normal, while 25 percent are looking toward an end to widespread layoffs. Only 7 percent felt the creation of new job opportunities would restore normalcy.
Similarly, nonprime consumers want an end to layoffs (30 percent), a clear end to the recession (29 percent), and new job opportunities (10 percent) before they can believe life has returned to normal.
The study determined that regardless of credit standing, consumers not only agreed there will be an imminent return to "normalcy," but shared the same priorities in purchasing plans in the coming year.
Both groups listed in order of preference the following major purchases in the next year: vacations, home improvements and automobile purchases. The only minor deviation shown was that nonprime borrowers placed elective medical or dental procedures above home electronics or computer purchases.
Although the study showed an overwhelming degree of optimism, the poll discovered that a slim 1 percent of nonprime consumers feel "life" will never be "normal" again, with 2 percent of average consumers in agreement.
Two identical surveys -- one of adult Americans 18 years of age and older, and the other of non-prime borrowers who are AmeriCredit customers -- were conducted in March 2002 by Market Facts, an independent national research firm. Both surveys have a confidence factor of 95 percent.
About AmeriCredit
AmeriCredit Corp. bills itself as the largest independent middle-market auto finance company in North America.
Using its branch network and strategic alliances with auto groups and banks, the company makes auto loans to consumers who are typically unable to obtain financing from traditional sources.
AmeriCredit has one million active loan customers throughout the United States and Canada and more than $13 billion in managed auto receivables.
The company was founded in 1992 and is headquartered in Fort Worth, Texas.
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