Credit-reporting agency Equifax says that as of June 2015 more than $1 trillion has been loaned or leased in the United States. The total dollar amount is 10.5 percent higher than last year.
The average loan amount is $20,800, which is a 3.65 percent increase over last year, and the average sub-prime loan is $18,200. Sub-prime loans comprised 23.5 percent of newly originated auto loans.
More than 9 million new loans were made up to April 2015, which is a 5.8-percent increase over last year. Overall, more than 73.7 million cars are financed through loans in the U.S.
Now that the average car loan is six years or longer, buyers may be able to afford taking longer, more expensive loans, and rising consumer confidence may spur more people into buying.
“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,” Dennis Carlson, Deputy Chief Economist at Equinox, said in a statement. “It clearly reflects that the improving economy has provided the impetus for consumers to replace their aging vehicles and begin to satisfy their pent-up auto demand.”
For context, the current student debt burden in the U.S. is around $1.2 trillion, which some have said is an “epidemic,” (although college debt usually doesn’t have any collateral). And if the sub-prime figure raises an alarm, David Ruggles has a fairly cogent argument why that may not be a bad thing.
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