Auto loan debt in the U.S. sped past the trillion-dollar mark again this year, according to the Experian State of the Automotive Finance Market report released Thursday.
“Automotive financing certainly has started off the year with a bang, seeing steady growth in balances and loan volumes throughout the first quarter,” Melinda Zabritski, senior director of automotive finance for Experian, said in a press release.
Outstanding car loans totaled $1.005 trillion in the first quarter of 2016, a substantial increase from the $905 billion outstanding the year prior. The first time the auto loan market hit $1 trillion was in the third quarter of 2015, and it continues to climb, as do car sales.
Used Car Prices
A new Edmunds report found that prices for used compact and subcompact cars are down, making them the best value for used car—shoppers right now. (If you’re looking to buy a car, check out these car buying mistakes to avoid before signing the dotted line.) According to the report, the cost of used subcompact cars decreased 5.7% year-over-year while used compact cars are down 1.5%.
“Low gas prices and easy credit are making SUVs — and their higher price points — more appealing to used car shoppers, but they’re also creating a great opportunity for small car—shoppers, who now have a wider selection at lower prices,” Jessica Caldwell, Edmunds director of industry analysis, said.
Financing Auto Loans
The report also found that banks still fund the majority of automotive loans, with an increase of 7.9% over the previous year, but finance companies and credit union loans grew 25.6% and 15.9%, respectively, making them the institutions with the most loan growth.
“With more and more consumers relying on financing, it is important for lenders to keep a close eye on delinquency trends to ensure the market remains healthy,” Zabritski said. “Likewise, consumers need to continue making their monthly payments on time to keep affordable financing options open and available.”
If you’re considering taking out an auto loan, it’s a good idea to check your credit score first so you have an idea of what terms and conditions you may qualify for. You can do this by viewing two of your credit scores for free on Credit.com. These scores are updated every 14 days, so you can monitor them to see how your spending habits are affecting your financial goals.
More on Auto Loans:
- Bad Credit? You Can Still Get an Auto Loan
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report