Outstanding Auto Loans at 5 Year Low

Written by Brady    Wednesday, January 18 2012

According to the lastest Federal Reserve G.20 release regarding Finance Companies, the amount of outstanding Motor Vehicle Loans is at the lowest point in 5 years. The report was released in December if 2011. It shows that during their last data collection period in October 2011 the amount of Motor Vehicle Loans outstanding is $178.7 billion. The number has declined significantly since 2006. Below are the totals for the last 5 years:

2006 - $259.8 billion
2007 - $261.5 billion
2008 - $247.7 billion
2009 - $205.6 billion
2010 - $185.1 billion
2011 (Oct.) - $178.7 billion

The drop in outstanding loans is significant. It should be noted that the amount of outstanding vehicle leases was down in the same manner as car loans. You will notice that the decline started after the financial market issues that occurred in 2008. That may help to explain why the outstanding car loan balance decreased so much. There were ripple effects from the financial meltdown that caused financial practices to change on both ends. Here are some of the factors that are in play:

- Consumers decreased spending and paid down their debts.
- Tougher economic conditions decreased the desire for excessive spending.
- Banks tightened lending criteria making it more difficult for many to obtain car loans.
- Gas prices have been at record highs for much of this timeframe.

As the economy improves it would not be surprising to see this number increase. It is surprising that it did not go up as much in 2011 because interest rates on car loans have been at historic lows, both for new and used cars.