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Posts Tagged ‘auto financing’

Delinquent Car Loans Reach All-Time Highs

Record-setting fourth quarter followed record-setting third quarter.

by on Feb.17, 2017

New car sales set a new record this year. Car loan delinquencies also hit a record high in 2016.

The rate and amount of delinquent auto loans has climbed to its highest level since the end of 2008 when the U.S. was teetering on the edge of tbe Great Recession.

Car loans delinquent by 30 days or more grew to $23.27 billion, the most since $23.46 billion in the third quarter of 2008. They were up from $22.98 billion in the prior quarter. Roughly 3.8% of the loans were delinquent at the end of the fourth quarter, which is up from 3.6% at the end of the third quarter, according to data on consumer debt collected by the Federal Reserve Bank of New York.

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Seriously delinquent auto loans whose payments were 90 days or more past due jumped to $8.24 billion in the fourth quarter, which was just an extension of the third quarter of last year, when the previous high was set, according to the survey. (more…)

American Car Buyers Paying Record Prices, Going Deeper Into Debt

Leasing soars as motorists look to hold costs down, says new study.

by on Mar.03, 2016

American motorists are paying more for their vehicles and borrowing more.

Even as U.S. car sales surge to record levels, a new study shows that American motorists are spending more than ever for their vehicles – with loan levels also reaching new records.

Searching for a way to offset rising prices, a growing number of buyers are turning to leasing, according to Experian Automotive which issued its quarterly “State of Automotive Financing” report on Thursday.

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“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new vehicle loans are soaring,” said Experian’s auto credit director Melinda Zabritski.


Automakers Bankrolling Half of New Car Purchases

Record auto sales means big money for financing arms

by on Dec.02, 2015

Car buyers are using the captive finance arms of automakers more than half the time for their vehicle financing.

The soon-to-be-record-setting automotive sales year is not only benefitting the bottom line for automakers, but also their captive finance arms that are now handling more than half of all new vehicle sales.

The automaker’s finance companies bankrolled 51.6% of new vehicle loans in the third quarter of 2015, up from 36.8% in Q3 2011. This represents the largest marketshare of new vehicle financing for captives since the recession of 2008, according to Experian Automotive’s State of Automotive Finance report.

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“Captive lending has made a comeback since suffering a steep drop-off caused by declining new sales and lender-type shifts during the recession,” said Melinda Zabritski, Experian’s senior director of automotive finance. (more…)

Vehicle Financing Hits $1 Trillion Mark for 2015

Robust sales driving buyers into dealerships searching for financing.

by on Aug.11, 2015

Buyers filled the showrooms of car dealers in June pushing the outstanding balances on vehicles over the $1 trillion mark.

If U.S. automakers are selling cars and trucks at a near-record pace that can only mean that buyers are financing those vehicles at a similar rate and the latest data says that is what’s happening.

According to Equifax Inc., as of June 2015, the total outstanding balances on auto loans and leases are $1.021 trillion, a year-over-year increase of 10.5%. Additionally, the number of outstanding accounts has increased 8% from a year ago to 73.7 million.

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“Strong sales numbers in both the new-car and used-car markets, coupled with the availability of quality financing for consumers are a few of the main reasons the industry has reached the one trillion dollar mark,” said Dennis Carlson, deputy chief economist at Equifax. (more…)

Ally Files Copyright Infringement Lawsuit Against Chrysler Group

Claims former employee took documents that helped with start of Chrysler Capital.

by on Sep.24, 2013

Ally, the former GMAC, filed suit in federal court against Chrysler Group LLC and a Spanish bank.

Ally Financial Inc., the former General Motors Acceptance Corp., has filed a lawsuit against a Spanish bank and Chrysler Group LLC in a dispute that has its roots in the 2009 auto bailout.

The federal suit alleges copyright infringement and misappropriation of trade secrets by Chrysler Capital, a partnership between Chrysler Group and Santander, a Spanish bank. In the suit, Ally asked a federal judge to Chrysler Capital, from “imitating, copying or making use of” the copyrighted forms.

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Ally became the finance arm of Chrysler Group during the bailout. A task force established by the Obama White House to organize a rescue of the distressed domestic auto industry decided to prop up GMAC, which had been crippled by the recession and by GM’s ill-advised foray into the home mortgage business, which turned into an outright disaster when the U.S. real estate bubble burst in 2008. (more…)

Motorists Paying More – But Loans Easier to Get

Incentives also increase.

by on Dec.05, 2012

Hyundai boasted the lowest incentives -- and the lowest transaction prices -- last month.

If you bought a car in November odds are you paid more than you would have at almost any time in the past year.  Transaction prices – what motorists actually spend after working in incentives and factory options – are at or near record levels.

That’s despite the fact that many manufacturers increased givebacks last month, hoping to keep sales momentum going. They’ve also been working with lenders to ensure that credit continues to become more readily available – though motorists have been stretching out loans and are now taking an average of 64 months to pay off a car purchase.

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“Industry average transaction prices climb once again with consumers’ continued appetite for highly contended vehicles,” said Jesse Toprak, Senior Analyst at the data tracking service TrueCar. “Today’s consumers value a nicely equipped vehicle as much as they do a low cost of ownership. Automakers are getting better at providing all the modern conveniences consumers come to expect for more of their models, resulting in higher overall prices hence improved profitability.”


Are Subprime Buyers Saving the Auto Industry?

Loans up, defaults down.

by on Sep.07, 2012

More subprime buyers are finding loans again.

Last month’s unexpectedly strong automotive sales numbers run counter to most other recent U.S. economic trends and buoy hopes the nation will escape a double-dip recession.

While a variety of factors appear to be propping up automotive demand – despite earlier forecasts of a slowdown – one key reason for the sales surge appears to be increasing availability of financing, especially for so-called subprime buyers.

During the depths of the recession, when U.S. new car sales slipped to a crushing 10.5 million low in 2009, even those with the best credit scores found it difficult to get financing and leases all but vanished.  Now, however, the financing situation has turned around.

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In fact, there were more subprime loans written in the second quarter of 2012 than in the period before the nation’s economic collapse, according to financial tracking firm Experian Automotive.

But is that posing the risk of future problems down the line, especially if the continuing high jobless rate leads to higher loan defaults?


Big Year for Used Cars

Short supply of “near-new” vehicles could drive prices up in 2012.

by on Jan.03, 2012

Used car sales reached nearly 39 million last year, triple new car volumes.

Americans bought nearly 39 million used vehicles in 2011, more than three times the number of new cars, trucks and crossovers sold last year.

But with demand threatening to outstrip supply – especially for “nearly new” vehicles – buyers saw prices rise sharply, a trend likely to continue through 2012, according to CNW Marketing.

“We saw a lot of people whose existing cars were just tired so, after two years of pent-up demand, that finally led to a surge of used car sales last year, and especially in November and December,” said CNW chief Art Spinella.

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Used vehicle sales totaled 38,792.169 for all of 2011, according to CNW research, up 5.2% from the prior year.  December volume surged 11.98%, to 3,142,513.

The year, as a whole saw a surge in private party, or consumer-to-consumer, sales, especially in the final months of 2011.  Shoppers and sellers have increasingly turned to free online services such as to make the connection, along with fee-based services such as

Dealers have also been using the Internet to boost their business, and according to CNW, December saw 73.1% of available used cars listed online compared to 69% a year earlier.

Since the economic recession began in 2008, there has been a notable shift in the marketplace, many traditional new car buyers migrating to the used vehicle market, according to Spinella.  Even as the economy – and, in turn, the new car market – has begun to recover, many are still opting for previously owned products.

That reflects the emphasis on value, higher prices for new cars and limited credit availability.

Spinella noted a “new phenomenon we’ve only since about 2008 (where) a lot of buyers who would normally choose a new car are going for what we call “transitional used cars.”  These are vehicles they expect to keep only until their personal financial situation improves and they can get back into a new car, he explained.

But there’s a problem for such buyers.  In years past, they might have opted for what the industry likes to call “nearly new” vehicles – cars that have just come off short-term, 1, 2 or 3-year leases and are in near-new condition, often backed by like-new warranties.

But because most lenders cut down on leases in recent years – many halting leasing entirely – there are far fewer of these vehicles available right now.  That has helped drive up prices on used cars overall, and relatively new models in particular.

During much of 2011, used car prices hit record levels.  They dipped about 1% in December, but Americans still spent about $28.2 billion on used vehicles last month, up from $25.6 billion a year earlier.

“And that trend will certainly continue,” predicted Spinella, though, on the positive side, he noted that many lenders are beginning to loosen up credit again for used car customers.

Chinese Auto Financing Business Booming

GMAC-SAIC sets record monthly contract volume.

by on Sep.14, 2010

World's largest auto market soon to be largest finance market as well?

Traditionally the new vehicle market in China was dominated by cash transactions. However, the Chinese desire for vehicles bought on credit might not be all that different than elsewhere. GMAC-SAIC Automotive Finance Co., Ltd. (GMAC-SAIC) today announced that it booked a monthly record for retail contacts in August, or more than 18,000 retail contracts in August.

China of course is the world’s largest auto market. GM and its joint ventures sold a record 1,826,424 vehicles in China in 2009.  GM ended 2009 number one among global automakers for the fifth consecutive year. With Chinese sales of 1,567,411 units through August 2010, GM is on track to remain number one in 2010.

The joint venture between Ally Financial Inc., Shanghai Automotive Group Finance Co., Ltd. and Shanghai General Motors Co. Ltd.,  has now  signed more than 109,000 retail loan contracts during the first eight months of 2010, which exceeds the 2009 full year total. Chinese industrial policy requires automakers to establish joint-ventures with local companies and reinvest profits in China.

“We are very pleased with yet another year characterized by strong business growth. Surpassing 100,000 retail contracts at this point of the year represents a significant milestone for not only us, but for the whole automotive finance industry in China,” said Rick Livingood, general manager of GMAC-SAIC.


GM Back in Auto Financing with AmeriCredit Buy

Cash transaction creates a new captive finance company at General Motors to provide more vehicle loans and leasing.

by on Jul.22, 2010

Is Whitacre creating his own empire, just as he did at SBC, in effect reassembling AT&T ?

General Motors Company and AmeriCredit Corp. (NYSE: ACF) today announced they have entered into an agreement for GM to acquire AmeriCredit, an independent – and more importantly successful – auto finance company in an all-cash transaction valued at about $3.5 billion.

The acquisition creates a new GM captive financing arm that will enable GM to provide potential customers with more credit options. GM claimed it would not change its current incentive plans in the U.S., which are among the industry’s highest. If true, this means that taxpayers would not incur increased costs from more of the kinds of subsidized financing that auto companies often use to bolster sales.

Thus far this year GM sales are not increasing as fast as the overall market. Auto companies continue to incur loses because of overly optimistic residual values for returning lease vehicles.

GM said it needs to provide financing to “non-prime” customers – 40% of the U.S. population but only 4% of its current car buyers – who are remain pariahs in the credit markets despite lavish taxpayer financed bailouts of Wall Street firms and big banks that totaled almost a trillion borrowed dollars  – and were designed to free up credit, according to the Obama Administration.

Under the terms of the agreement approved by both companies’ boards of directors, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the closing date, which is due by the end of the fourth quarter of 2010, pending various conditions, including the approval of AmeriCredit shareholders

GM’s proposed purchase price is about a 25% premium over AmeriCredit’s closing share price on Wednesday. AmeriCredit has traded for as high as $26.49 a share this year.

“Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board,” said GM Chairman and Chief Executive Officer, Ed Whitacre about the Texas based financing company.

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GM claimed it will maintain its relationship with Ally Financial, the renamed GMAC, which is and now an independent taxpayer-owned company that provides retail and wholesale financing to GM and Chrysler Group. Currently GM has 57% of its transactions in the retail prime market through Ally and other banks, above the industry average of 53%.