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The way I see
it, there are only two conclusions you can draw from the above: either
Americans are unduly -- even wildly -- optimistic about their car-buying
plans -- and, by extension, their future prospects -- or their ability to buy
a new car depends on something other than their earning power and economic
circumstances.
If the latter,
perhaps it has something to do with this:
"Subprime
Car Loans Return to Favor Among Auto Lenders" (Detroit
News)
Consumers
without top-tier credit are finding it easier to get new car loans, as banks
and other lenders are lowering the scores needed to qualify.
While that
means additional sales for automakers, and enables more motorists to get into
new cars and trucks, it raises questions as to whether lenders are falling
into the same risky lending practices they followed before the recession.
"There's a lot of lenders now that are into the subprime
business," said Jody Lee, sales manager at Taylor Chevrolet. "What
used to be a good score at a 650 or 700, now 550 is a good score."
During the
first quarter of this year, total U.S. car loans totaled $52.5 billion.
That's 49 percent higher than the same period in 2009 — the recession's
low point — according to Equifax's National Consumer Credit Trends
Report.
Also during the
first quarter, the average amount financed on new vehicles rose by $589, to
$25,995, and for used cars by $411, to $17,050.
Furthermore,
buyers are stretching out payments for longer terms: The average length of
new- and used-vehicle loans jumped a full month during the first three months
of this year, to 64 and 59 months, respectively.
More loans and
looser lending restrictions have helped boost new car and truck sales to
levels not seen in four years. Estimates call for 14 million to 15 million
vehicles to be sold in the U.S. this year, about 30 percent higher than in
2009.
Either way,
it's hard not to think that the extraordinary divergence between the two
markets -- jobs and autos -- will lead to an unhappy ending.
Michael J. Panzner
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