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Equifax Reports Increased Auto Borrowing; Increases In Credit Card Limits Prior To 2013 Holiday Spending Season

Stocks in this article: EFX

ATLANTA, Dec. 19, 2013 (GLOBE NEWSWIRE) -- The latest Equifax (NYSE:EFX) National Consumer Credit Trends Report, indicates that as portfolio quality has improved, originations in multiple consumer loan types have opened to higher risk consumers to varying degrees. This is reflected within the auto lending sector as origination continues to thrive while payment performance improvements for auto loans remain strong.

From an origination standpoint, the most recent data indicates that the auto-lending sector enjoyed its highest September monthly origination totals in eight years, with 1.9 million auto loans originated. Additional origination metrics from same timeframe include:

  • Growth was reported in both financial institution-originated auto loans (more than 950,000) and captive and other finance company-originated loans (more than 975,000). Both sectors realized the highest loan totals for the month of September of the last eight years;
  • Subprime auto lending (defined as having Equifax Risk Scores below 640) now accounts for approximately 30 percent of all auto loans originated today;
  • Total Auto loan amount originated also hit an eight year high at nearly $39 billion; and
  • While total auto loan volumes and amounts exceeded 2006 totals, the average loan amount was slightly less -- $20,179 (2013) vs. $20,420 (2006). This fact, coupled with the lower interest rates being charged today has resulted in an approximately 8 percent reduction in average monthly loan payments for new borrowers.

"The auto finance sector has continued to perform at a high level throughout the year as consumers continue to take advantage of favorable interest rates and look to replace their aging cars," said Equifax Chief Economist Amy Crews Cutts. "The median age of an automobile hit a record high 11.4 months earlier this year according to Polk, and many consumers have reached a point where their cars are beginning to require costly repairs. As confidence in the economy grows, consumers are increasingly making the decision to replace rather than repair their vehicles. This growing trend is reflected in the strong sales of new cars, which will hit over 15.5 million units this year, a six-year high, and the resulting high auto-loan origination totals we're seeing so far in 2013."

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