Equifax Anticipates Return to Pre-Recession Auto Loan Levels
Oct 5th, 2011 @ 12:17 PM by Amber Nelson
Auto loan originations continued to grow on a yearly basis during the first six months of 2011, according to a new report from credit reporting agency Equifax, and figures could be back into pre-recession territory by the end of the year.
During the period from January to June 2011, new car loan originations increased 15 percent to 9.6 million, up over the first six months of 2010, when total loans were at 8.3 million. Moreover, when factoring in total originations from the first half of 2009, which were only 7.5 million, this is quite a significant trend. However, the new pace has not yet reached pre-recession levels of more than 10 million loans in a six month period.
There were 1.7 million loan originations in June of this year, which is down slightly from March’s 1.8 million total, but compared with June of 2010 levels, it was up 11 percent. And impressively, June’s total is up from the 1.6 million car loans made during August 2009 when the “Cash for Clunkers” program was drawing buyers.
“Auto lending continues to be one of the most promising lending sectors today based on the data,” said Michael Koukounas, Senior Vice President of Special Client Services for Equifax in a press release. “If this momentum can be maintained through the remainder of the year, 2011 year-end totals should reflect a comparable return to normalcy to pre-recession lending levels.”
Loans made to subprime borrowers still made up a tiny percentage of loans during the first half of 2011. Less than 10 percent of all loans made by banks or credit unions were to borrowers with credit scores below 600. Among auto finance companies, the rate was a bit higher at 25 percent.
Interestingly though, one group of loans that is back to pre-recession (June 2007) levels is luxury car loans over $40,000.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.