Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 30, 2011

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Auto loans issued from auto financing companies has increased by more than 47 percent, according to an Equifax press release.

 

There were more than 854,800 loans originated by auto financing companies in July 2011. That is up by 273,500 loans when compared to July’s loans issued last year.

 

Auto financing companies also outpace the amount of loans originated by both banks and credit unions combined by over 20,000.

 

This increase in loans issued may not be a good thing though. An alarming 38.5 percent of those loans originated by these companies were issued to subprime borrowers—those with credit scores below 640. But, surprisingly, delinquency rates, defined by those who are 60 or more days past due on an auto loan, have lowered from 3 percent to 1.63 percent.

 

Michael Koukounas, Senior Vice President of Special Client Services for Equifax, explains “With unemployment rates remaining elevated for a prolonged period, auto lenders have proactively adopted more comprehensive data and verification tools for greater loan-level transparency in evaluating a wider band of consumers, which has helped enable the auto lending industry to recover more quickly than others,” according to the release.

 

The auto loan industry may very well be on to something, as their delinquency rate is far below those rates other loan types are experiencing.

 

With a collective amount of $32 billion in originated loans, the growth between this year and last that the car loan industry is experiencing is just under 15 percent to be exact.

 

The report by Equifax also shows that average monthly payments remained relatively stagnant; signifying the growth in the auto loan industry is tied to the increase in auto loans issued as opposed to an increase in loan costs.