Latest Auto Lending News
Here are the latest news in the world of consumer auto lending. Stay informed on the latest practices affecting the cost of your next car loan and vehicle.
- TransUnion: Auto-Loan Delinquency Rate Rose in Q1
MarketWatch 25 Jun 2013
The first-quarter national auto-loan delinquency rate rose slightly from a year earlier, due primarily to an increase in delinquencies for subprime borrowers, reports TransUnion Corp.
- House Democrats Seek Details on Consumer Bureau Auto Loan Rules
Bloomberg 30 May 2013
In a letter to the Consumer Financial Protection Bureau, 13 Democratic members of the House Financial services Committee requested details on how the agency plans to enforce new rules on auto loan bias...
- CFPB Targets Discrimination in Auto Loan Battle
American Banker 16 May 2013
The Consumer Financial Protection Bureau is laying the groundwork to bring enforcement actions against auto lenders that pay bounties to brokers to steer borrowers toward high-cost loans, on the grounds that the markups are discriminatory because they are steeper for minorities than for whites...
- Households Cut Overall Debt, But Student Loans Jump
Wall Street Journal 14 May 2013
U.S. households lowered their debt loads during the year's first quarter, although student loan borrowing continued to climb, according to a report from the Federal Reserve Bank of New York. Total indebtedness fell by 1 percent from the previous quarter to $11.23 trillion. Total mortgage debt was down to $7.93 trillion, from $8.03 trillion in the three months prior; while credit card balances fell by $19 billion to $660 billion. Auto loans, however, were up by $11 billion; and student loan borrowing snowballed by a staggering $20 billion...
- Americans Are Borrowing Again But Still Less Than Before Freeze
Wall Street Journal 08 May 2013
According to the Federal Reserve's survey of senior bank-lending officers, 28 percent of banks reduced the cost of credit lines early this year to smaller businesses that have annual sales of less than $50 million. Similarly, residential lending began creeping up last year, and even individuals with poor credit are more able to buy a car today than they have been in recent year...
- Regulators Scrutinize Auto Lenders Over Add-Ons
Wall Street Journal 03 May 2013
The Consumer Financial Protection Bureau has issued subpoenas to U.S. auto lenders over the sale of extended warranties and other financial products, expanding a civil probe that could put the brakes on the thriving vehicle-finance industry. Although such products are legal, regulators are investigating whether terms and costs -- which typically are built into the total purchase price -- are adequately disclosed...
- Credit Spigot Opening Up for Subprime Auto Borrowers
U.S. News & World Report 16 Jul 2012
Credit remains tight for most Americans, but auto financing is the exception. In recent months, consumers have found it increasingly easy and cheap to borrow money for vehicle purchases. New auto bank loans reached a seven-year high between January and March 2012, Equifax reports. The trend even applies to subprime borrowers. "The feeling is there is more loosening in auto lending than there has been and will be in other sectors of the consumer credit world," notes Andrew Jennings, chief analytics officer at FICO. The increase in auto lending is partly due to higher demand for cars and trucks to replace older vehicles. Additionally, auto loans tend to be less risky for lenders, with traditionally lower delinquency rates. Cars and trucks also are easier to repossess than homes. "It's not like a house where you stop making the payments and they take two years to kick you out of the house," explains Bankrate.com senior financial analyst Greg McBride. "You miss two car payments and it's not going to be in the driveway in the morning." However, even as borrowers with subprime credit have more access to credit, it comes with higher interest rates.
- Rate of Late Auto Loan Payments Sinks to Lowest Level Since 1999 in 1st Quarter
Associated Press 22 May 2012
The pace of late payments for auto loans fell nationwide in the first three months of the year to the lowest level in more than a decade, even though lenders have granted financing for more high-risk borrowers. For the 2012 first quarter, the rate of U.S. auto loan payments 60 days or more past due declined to 0.36 percent, about 27 percent lower than the same period of last year, according to TransUnion. That also is down about 22 percent from the fourth quarter of 2011. The latest rate is the lowest since TransUnion began tracking auto loan data in 1999. Auto loan delinquencies have been trending downward on an annual basis for the last 10 quarters in a row -- in part because, after the last recession, many borrowers opted to pay their car notes ahead of their mortgage, credit cards, and other debts.
- The Color of Money: Pay for Car With Cash, You'll Reap the Payoff
Columbus Dispatch (OH) 20 May 2012
While it may seem like common sense, some consumers are unaware that they can buy a vehicle with cash as an alternative to getting caught up in predatory auto financing. Edmunds.com recently announced the launch of its "Debt-Free Car Project," which aims to teach consumers to purchase a reliable used car for less than $5,000 in cash. The site editors developed the project due to concerns over "buy here, pay here" used car outlets. Consumer advocates have long criticized dealers who prey on vulnerable individuals by offering car loans at high interest rates. According to Edmunds, buyers are often working to save about $3,000 to purchase a reliable car. "We were thinking, 'Why don't people buy a car outright,'" said Ronald Montoya, Edmunds.com Consumer Advice Editor. "If they are putting down deposits of $3,000, then that's more than enough to buy a car that is reliable." As part of the campaign, Edmunds staff purchased a 1996 Lexus for $3,800. The team plans to track and write about the vehicle's performance over the next year.
- Returning Veterans Can Lower Credit Card Interest Rates
KSTP Eyewitness News ABC 5 (Minnesota) 16 May 2012
Although not widely known, the 2003 Servicemembers Civil Relief Act (SCRA) offers valuable protections for current and past members of the U.S. military. Under it, deployed veterans can serve out their missions overseas without worrying about finances. For example, the law prevents banks from foreclosing on veterans who are deployed. This applies not only during the active-duty period but also for nine months after. During this time, creditors cannot foreclose or repossess items from veterans without a court order allowing them to do so. The SCRA also caps loan interest rates at 6 percent while enlisted persons are on active duty, a limit that also applies to credit cards, auto loans, and business financing. Veterans who send a letter to lenders to request the 6 percent cap, within 180 days of coming home, are entitled to a credit or refund if their loan is fully paid.