Looking to purchase a vehicle for your business? The U.S. auto loan sector has continued to expand for the past decade or so. Most people have found it easy to finance their car purchases using loans.
This trend has been on the rise and statistics show that the auto finance industry could be the next big thing.
Below are the most recent statistics:
- In 2019, 17 million vehicles were sold through auto financing
- There was a total loan debt increase of $1.3 trillion in 2010
- The average amount of auto finance loans has reached its highest – $32,480
- The average credit score for those borrowing car loans is at its highest.
Statistics also indicate that more than 85% of cars sold in the United States in 2019 were financed. Besides that, 54% of used cars were also financed through loans.
Auto loans and credit score
According to the Federal Reserve Board, people with a credit score of 760 and above were responsible for 33% of loans worth $598 billion in the third quarter of 2018 and 2019. On the other hand, subprime lenders accounted for 22 percent of all the loans.
This trend means that more and more Americans are using loans to purchase cars. A bigger percentage of those taking loans are people who have between average and perfect credit history.
This is an indication that lenders are becoming more flexible when it comes to lending money to purchase cars.
Auto loans and credit unions
Besides traditional lenders, credit unions have also joined the bandwagon of auto financing. A credit union car loan is ideal for people who already belong to various credit unions.
Let us take a look at the benefits of a car loan from a credit union:
1. Lower interest rates
The good thing about credit unions is that they are not after making money. They are non-profit organizations whose objective is to better the lives of their members.
That’s the reason why most credit unions offer loans to their member at very lower interest rates – some can go as low as 1%.
2. Flexible repayment periods
Another advantage of taking a loan from a credit union is flexible repayment terms. Unlike other lenders who are keen to get back their money faster, credit unions give their members ample time to repay their car loans.
3. Lower fees
As a member of a credit union, you are entitled to a range of benefits. This also includes favorable terms when you take a loan to purchase a car.
For example, you won’t be charged on loan processing fees – and even if they charge, it will be much lower compared to a traditional lender.
How do you find the right car loan?
Before taking a car loan, it’s important to carry out due diligence on the specific type of car you want. This is especially important if you’re financing a used car versus new. Get a list of several lenders and pick one that has favorable terms and conditions.
In a nutshell, the auto finance industry has experienced a lot of success in the past 10 years. The number of people taking car loans has sharply increased. In addition, the number of lenders specializing in auto loans is on the rise. This includes credit unions – who are offering such loans to their members at lower interest rates.
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