Loan applications for new automobiles are at record high levels, according to a study released earlier this month by Equifax?one of the? nations largest credit reporting agencies.
The report, entitled the National Consumer Credit Trends Report, highlights low interest rates and low unemployment levels are the main reasons why consumers are buying new cars. Add to the mix that severe loan delinquency rates are also at historically low levels, banks and finance companies are willing to take a chance on extending credit to marginally credit worthy consumers to buy cars.
?More consumers are staying current on their payments, which is due to both improved economic conditions and lenders and dealers are qualifying the right borrowers across the entire credit spectrum,? said Dennis Carlson, deputy chief economist at Equifax, said in a media release.
Consumers are opting to lease autos instead of purchasing. For example, according to the Equifax report, in April 2015, banks held nearly 1 million?about 973,000 auto leases and traditional finance companies held a whopping? 6.63 million leases?equaling an increase of between 12 to 19 percent yearly growth.
?People are feeling more confident and secure about their jobs and finances and buying new cars,? said Paul Zaleon, a tax analyst and financial adviser. ?Auto loans have performed fairly well coming out of the 2008 financial crisis and consumers are continuing to capitalize on this trend.?
Lastly, according to information from the Kelley Blue Book, the average price of a new car or truck sold in the U.S. in April 2015, was about $34,000.