After months of yellow light lending, consumers are again getting the green light for a flood of car loans and credit cards even if they have damaged or dinged credit.
The big sales numbers the auto industry is enjoying right now are partly because of the new lower lending standards. In fact, The Financial Times of London reports that Chrysler has really pumped up its sales numbers because they’re doing loans for customers with sub-prime credit.
The other factor that’s helping the auto industry enjoy the best sales since the Great Recession began is the time element.
During the economic meltdown, people held on to their cars long past their useful life. Instead of tiring out of a car as they historically might have because they got bored with it, what you have is a situation where people are now aging out of cars because they’re practically breaking down by the side of the road!
Then you add in the car loan money which is coming at unbelievably low rates. And I’m not talking about the zero percent interest or the 0.9% or 1.9% stuff from the auto makers. I mean what many of the credit unions are doing. Navy Fed, one credit union that I’m a member of, is doing car loans starting at 1.79% right now for people with top drawer credit.
The one area where lending standards remain tight? Mortgage lending.