TransUnion, a leading credit authority in America, is predicting that the amount people owe on their auto loans should continue to grow throughout 2016.
That’s good news because it means auto loans will continue to remain profitable for fiance companies so they will be likely to continue to issue more loans. In other words, the profits from the higher balances will make it easier for people looking for subprime auto loans to qualify.
According to AutoRemarketing.com,
“TransUnion forecasts the average balance will surpass $18,000 in Q4 2016, a growth of more than $1,000 over the past two years. By the end of 2016, auto loan debt per borrower will grow more than $3,500 from Q4 2009, when the average balance was $14,956.”
The higher balances reflect the fact that people are taking out longer-term loans, and are willing to pay higher auto loan rates in order to qualify for financing for the vehicle they want to purchase.
Consumers should be careful, however, that they don’t take on a higher auto loan than they can afford in the long term. If delinquencies end up rising, finance companies may pull back from the auto loan market.
To find out what an auto loan would cost you, try out our free auto loan calculator.