US auto loans are at their highest level since before the start of the great recession, according to a report from Automotive News. Originations increased 11 percent during the second quarter of 2013, to a combined $91.8 billion for all credit tiers, while overall sales were up nine percent overall.

That's good news for both manufacturers and consumers, as it shows that both credit is becoming more readily available and people are actually using said credit to buy new cars. The highest jump in originations was below prime risk – credit scores of 621 to 660 – which saw a 16-percent jump and represented $12.1 billion.

And while there should be concern about lending to the unqualified, the Fed report that AN used as a source cautions that, "While originations to borrowers with the lowest credit scores have increased, they are just recently approaching historically normal levels and are below those that we saw during the boom years leading up to the crisis."

There are other reasons to be concerned, though. It's unclear how long this uptick will continue, considering that the trend for financing is towards longer terms and people are hanging onto their vehicles for longer. Baby Boomers are also making up an unequal proportion of sales, and there's also the trendy concern over the relationship between people and the car. While it's great to see such a positive rise in lending, it's important to remember that we aren't out of the woods yet.


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  • 32 Comments
      Armand
      • 1 Year Ago
      I don't see how it is "good" when people take on debt to buy depreciating assets they can't afford.
      Scooter
      • 1 Year Ago
      In these harder times, I think more and more families and couples are more willing to dive head first into car loans. For many people vehicle ownership, brand ownership is a symbol of self worth and a measure of success. The willingness to lend has probably never been higher. One of my single-mother family friends recently bought a Nissan Altima on loan, (@$600/mo). Being a single mom whose been living on the edge of financial disaster, we all shook our heads in disappointment. Then she told us that she had traded in that car not even 6 months into its loan, for a Acura TL. Just because she wanted the prestige of driving an Acura and a dealer was willing to allow her to over extend her borrowing ability. Guess what? She just lost her waitress job recently. She now faces a $700+ loan on a silly TL. Love it or hate it, vehicle ownership has gone well beyond point A to point B transportation needs. Many buyers are willing to do anything to get the vehicle they've been lusting after. I've seen $60,000 cars in raggedy neighborhoods. It doesn't help that dealers are more than willing to give buyers a loan, and buyers are more than willing to take whatever terms they are given. You'd be surprised how many of your family and friends are paying 24% interest loans with mo/payments over $500 for 6 years. Dealers of course, they stand to only gain, since in many cases they simply wash their hands of you and your loan now belongs to a bank. I suppose at the end of the day, in these hard times, we are buying more and more cars to nurse our wounded pride or make us feel "successful" in the eyes of others.
      RGT881
      • 1 Year Ago
      621-660? Those are crap credit scores. Not only that, but these loans are probably long-term, and so in few years they'll be upside down. I'm for one glad that 10YR is going up. Cheap credit=ultra bad decisions.
        Tagg
        • 1 Year Ago
        @RGT881
        Working in a dealership I can tell you I have seen multiple people (maybe 10-12) bring in loans from their bank/credit union that run between 7-10 YEARS! When I tell them that long of a loan is bad idea I get rebuffed every time and often chided for saying anything. These buyers will be upside down for the entire term of their loan and don't seem to care as long as they have a car they can show off. Few learned anything from the last crisis and that goes for both banks and consumers.
          RGT881
          • 1 Year Ago
          @Tagg
          Unfortunately very few people understand what term "affordability" really means, hence the housing and student loan crisis.
          392 guy
          • 1 Year Ago
          @Tagg
          10 year loan? Thats a long time...
      • 1 Year Ago
      [blocked]
      lorepod
      • 1 Year Ago
      I'm driving a 16 year old vehicle and am going to get a new vehicle while interest rates are still low.
        clquake
        • 1 Year Ago
        @lorepod
        You only get the best rates if your score is high enough.
      CadiVetteFerrari
      • 1 Year Ago
      I don't know who's buying all these lavish cars, mostly the mega-rich. Not everyone who is a millionaire buys all the latest and greatest things. They became millionaires because of smart investments. It's true, people in the middle class and lower are financing their way to hell to have luxury cars sitting in their driveway or on the street.
      De Cent
      • 1 Year Ago
      Prices are insane. $38k for a Tiquan. No way would I pay that. For a lifted golf. Ouch. And I like vws!!!!
      holmesarliss
      • 1 Year Ago
      Unless you can pay cash, which nobody can, just enjoy your ride and make the note.
      CJ_313
      • 1 Year Ago
      My mother (a baby boomer at 56 years old) just financed a used 2005 Toyota Solara, roughly $7,900 before tax/fees @ 8.99% interest for 3 years and with a fico score in the mid-600's due to a foreclosure during the "boom" years. I think she fits this criteria. Having purchased brand new cars since the 1980's until earlier this month, I think she has realized what many others need to; sometimes you have to crawl before you walk... again.
      Feurig
      • 1 Year Ago
      Well of course it's high. With interest rates so low, never before have loans been so free.
      392 guy
      • 1 Year Ago
      Longer loan don't really matter to me. Its up to the buying to pick the term he wants. As for me i like the lower payment and the cars I've gotten I kept for a really long time. Its the people that have to have new car ever 3-4 years that get upside down with longer loans. I just dont see why people look down on long term loans.
        jtav2002
        • 1 Year Ago
        @392 guy
        Because you're paying interest longer (unless you got promotional 0% financing) and may be buying more car than you really should. As far as I'm concerned if you need to finance a vehicle for more than 4-5 years to afford the payments you're buying more car than you can really afford.
          clquake
          • 1 Year Ago
          @jtav2002
          392, that's exactly how financial trouble begins. What should happen is that the buyer should stop and pick a car that they can afford over 3-5 yrs. If you're going longer than that, your cash flow (or lack of) won't really allow you to drive it (insurance, fuel, maintenance, etc).
      groingo
      • 1 Year Ago
      And when the economy tanks again, they will be the first ones to be defaulted on and the clock is ticking.
        A_Guy
        • 1 Year Ago
        @groingo
        Is it really? Or are you hoping, praying that it is?
          A_Guy
          • 1 Year Ago
          @A_Guy
          @comment814: I wouldn't say it 'tanks' though. Sure, it dips, but that is different.
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