Americans Have Borrowed a Record $968 Billion to Buy New or Used Cars: Study

Americans Have Borrowed a Record $968 Billion to Buy New or Used Cars 1 photo
The financial crisis that hit the U.S. and then the world at the end of the 2000s was caused by a complex interplay of policies that encouraged home ownership, providing easier access to loans. Buying goods with money that is not yours remains a routine that is not just dangerous but it recently reached an all-time high in terms of resources dedicated to the purchase of new and used vehicles.
The expression “all-time high” may not seem like much, but according to a recent research conducted by Experian, a company that tracks auto loans, that number reached $968 billion in the third quarter of this year. This news may pass as worrying, considering that the world has recently gone through a massive economic crisis some countries out there are still struggling with.

“We’re seeing record auto sales and vehicle prices are up, so loans are increasing,” said Melinda Zabritski, senior director of automotive finance with Experian, according to CNBC. “Also, more people are paying for their vehicle with an auto loan as opposed to financing it with a home equity loan or paying cash.”

However, it would appear the majority of those who are making these loans have a stable income. 61.3 percent of the money borrowed during the third quarter was done so by drivers with prime or superprime credit ratings, the research shows. The percentage is quite big compared to the loans taken out by those with subprime and deep subprime ratings, which is 19.3 percent.

Moreover, Zabritski pointed out that the percentage of borrowers who have fallen behind on their auto loans remains very low. “This is a very steady market in terms of loans to high-risk borrowers,” she said.

As BMW's U.S. sales recently indicated, the current gas prices in the country, as well as affordable credit and high used-car values, lead to more and more people picking up leases.
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