Americans have borrowed a record $1 trillion in car loans, which is the first time in U.S. history that they have owed this much, according to 14 News. The record figure was caused by strong car sales, rising car prices and low interest rates.
New car sales figures went up six percent this year, reported CNN Money. The automotive industry is also set to sell a record number of cars in the U.S. this year.
Jason Laky, automotive business leader at the credit agency TransUnion, believes that financing has become very attractive for the average American car buyer. Borrowers with top credit scores qualified for loans for less than three percent.
"There are a lot of lending choices for consumers, a lot more competition. That's made financing more widely available and very attractive," Laky said.
The rising prices of automobiles caused the amount owed by American car buyers to go up 11 percent. With new car prices averaging $32,529, the average borrowed amount was about $21,700. The average car loan balance also rose faster than mortgage loans, according to the TransUnion study, reported CNN Money.
The average payment for vehicles has been at $400 a month, and a combination of low interest rates and longer loan terms spurred this trend, according to Fox 28.
Other statistics show that only an estimated $9 billion, which is about one percent of the total loan volume, was labelled as past due. Car loan delinquency rates were better than mortgages and credit cards' delinquency rates.
Most American car buyers have very good credit, which caused a lower volume of subprime loans, a mere 15 percent of the total loan volume, noted CNN Money. Unemployment rates are down and job growth is up.
"When Americans have jobs, they're going to go out and purchase cars with confidence," Laky said.