Auto loan originations in the first two months of 2013 are at highest level in more than eight years, showed the latest National Consumer Credit Trends Report of Equifax.
The consumer credit reporting agency reported that new auto loans in January and February of this year skyrocketed to $69.6 billion, more than 70 percent greater than the recession figure of $40.2 billion in 2009.
According to Amy Crews Cutts, chief economist of Equifax, the strong demand in light trucks and a shortage in secondhand trucks are major factors in the 3.5 million new auto loans that were originated in this time period.
“Light trucks in particular are in demand for the newly energized housing construction trade and there is a lack of supply of used trucks available so prices on these vehicles are currently rising,” said Crews Cutts.
The auto industry may be thriving but the 15-million forecast for car and light truck sales by the end of 2013 is more than 10 percent short of the all-time peak recorded in 2000 when more than 17 million vehicles were sold.
The industry began experiencing successive declines since then until the number of vehicles sold plummeted to 10.4 million towards the end of the recession in 2009.
The renaissance of auto sales is not entirely attributable to the recovering U.S economy which is actually dull.
Interest rates in auto loans remain to be low due to the efforts of Federal Reserve which is expected to end next year or in a couple of years.
Moreover, banks have loosened credit standards which make auto loans more easily available to consumers with so-so credits. They are becoming more confident in the lending business as fewer people end up sour in their loans. The Equifax report showed that serious delinquencies on auto loans fell in April of this year.
Nevertheless, the rising demand for vehicles hints a bettering economy as people become more optimistic about it.