A recent report from Moody’s Analytics shows that auto loans have increased significantly over the last year. Economists throughout the country are confident that car purchases will continue to increase as economic activity accelerates.
Signs of Economic Growth are a Boon for the Auto Industry
The auto industry was held back by the economic downturn. However, the economy has since rebounded, which will be highly beneficial for the once struggling industry. Here are some signs that economic growth will persist, which will continue to drive auto sales:
- The most recent GDP report showed that the economy expanded 5% in the third quarter.
- Employers created an average of over 200,000 jobs a month last year. According to the Bureau of Labor Statistics, 2014 was the strongest month for job creation since the beginning of the 21st
- Consumer demand has increased over the past year, which is spurring economic activity throughout the country.
Most experts are confident that the economy will continue to expand in 2015. Auto loans will probably continue to accelerate as employment and wages increase.
Some Challenges Will Remain
Although auto sales are increasing, the industry still faces some challenges. One of the issues is a growing number of high-interest, subprime loans, which could be fueling a bubble. According to Moody’s economic Mark Zandi, the number of people defaulting on high-interest loans has increased, which is a cause for concern. His concerns are shared by Chris Kukla, an expert from Center for Responsible Lending.
The research shows a number of people have defaulted on these high-interest loans, which raises concerns about the lack of financing available. Citizens should be encouraged to seek loans with reasonable interest rates from honest auto dealers and other experts, rather than turning to subprime lenders.
Consumers Should Seek Reasonable Loan Options
While the economy is on the upswing, consumers are still limited in their ability to purchase new vehicles. Many lenders still have strict policies in place to discourage high risk borrowers.
Fortunately, there are still other options available for people that want to purchase a vehicle. Many lenders offer loans with reasonable interest rates to draw consumers. Since the interest rates are lower, they aren’t as difficult to repay.
If you are looking to purchase a new vehicle from this retailer or another auto company, then you should speak to them about their lending options. They will help you find a way to pay for a new vehicle.