Car Buyers See Signs of Thaw in Lending

Washington DC January 6, 2010; The AIADA newsletter reported that for car buyers, four words mean the difference between going home in a new sedan or their old clunker: Your loan is approved.

According to MSNBC, they are being uttered more often these days, spurred by a trillion-dollar government program that provides guarantees when those loans are sold to investors.

Consumers are paying less to borrow. Interest rates have been at record lows since last December. Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months. Fourth-quarter figures aren't yet available, but Jesse Toprak, vice president of the auto pricing tracker at an automotive website, says December saw an uptick in auto loan approvals for consumers with average or above-average credit as auto finance companies tried to clear out inventory.

Still, Toprak said it could take another year or even longer for financial firms to trust consumers enough to return to normal levels for auto lending.

It's also far from the freewheeling days of the credit boom. Third-quarter auto lending was down 30 percent from the same period in 2006, a year when U.S. car and light truck sales reached 16.5 million.