Drivers in the market for an auto loan may soon see some changes in the types of offers from financiers, as the new Dodd-Frank act is introducing some reforms to the lending business.

In the past, lenders have been able to write bad loans (loans that don't have a good chance of being repaid in full) but remove themselves from having to deal with any risk by then selling those loans in a package to investors. When this practice got out of control in the mortgage industry, however, the housing bubble burst and contributed to the economic collapse.

So, Congress has taken steps to curtail the practice in the future, according to CBS Marketwatch. Now, lenders are only allowed to sell 95 percent of any one loan – they still have to be on the hook for the remaining 5 percent. The only way a lender can now sell off 100 percent of a loan is if they curtail the loan to meet certain requirements.

To meet these new requirements, the borrower must use 20 percent of the loan's total value as a down payment. The length of the loan can also not exceed 5 years, and for used cars loans the age of the car plus the length of the loan cannot surpass five years. Finally, the buyer must not have any 60-day missed payments, bankruptcies or foreclosures on his record over the past few years.

Drivers who are planning on taking out a car loan to finance their purchase may want to make sure that they meet their requirements. It won't be impossible to get a loan if they don't, but the terms could be less than favorable. When drivers are ready, New Jersey State Auto Auction can help them with all their financial needs.
 

The Federal Reserve is reporting that consumer credit rose by $5 billion in January, the fourth straight month of an increases, signalling a strong shift in the availability of credit for buyers.

Monthly reports from the government agency track both revolving (money charged to credit cards) and non-revolving (money tied up in loans) lines of credit. While revolving credit actually fell by $4.25 billion in January as compared to the prior month, non-revolving credit rebounded in a big way, with an increase of $9.26 billion.

With the spike in loans coinciding with a strong surge in car sales, many analysts believe that auto loans are driving the movement forward.

"Auto sales have been doing well and today’s report is a reflection of that," Neil Dutta, an economist at Bank of America Merrill Lynch in New York, told Bloomberg. "Credit standards remain tight – we’re seeing that with credit cards – but at the margin we’re seeing some loosening, such as auto finance."

With so many drivers seeking out car loans and lenders being more willing to offer them, it's a great time to be in the market for a new vehicle. Drivers who shop at New Jersey State Auto Auction can select from a wide range of cars for sale and a variety of auto finance options to get in the vehicle of their dreams.

The auto loan delinquency rate, which tracks loans with payments that are more than 60 days late, remained relatively flat in the fourth quarter of 2010, although the figure was well below that of the same period in 2009.

According to TransUnion, one of the three major credit bureaus, 0.59 percent of all car loans were delinquent in the fourth quarter in 2010, a very slight increase from the 0.58 percent in the third quarter. However, the rate was still a 27.2 percent improvement over the fourth quarter of 2009.

"As expected, the national delinquency rate changed very little during the fourth quarter as this period typically exhibits the least amount of seasonality," said Peter Turek, automotive vice president for TransUnion. "The good news is that TransUnion expects national auto delinquency rates to continue to be well below the peak of 0.86 percent – a rate experienced during the heart of the recession in the fourth quarter of 2008."

The credit bureau predicts that the figure will remain relatively stable throughout 2011, and won't approach the levels seen during the recession. Specifically, the company is forecasting a rate of nearly 0.48 percent for around mid-June, before jumping back up to 0.56 before the end of the year.

Drivers interested in financing their new or used vehicle purchase may want to visit New Jersey State Auto Auction, which offers car loan solutions for all buyers.
 

The auto industry is quickly recovering from the crippling effects of the recession, and one of the key components in the turnaround is the increase in the availability of car loans.

According to the New York Times, new car sales rose 11.4 percent in 2010, with used cars similarly seeing strong sales. The first two months of 2011 have been even stronger for dealers and automakers.

One of the most marked differences between 2010 and 2009 is the availability of auto loans, especially to buyers with a bad credit history. CNW Market Research data shows that 859,000 vehicles were sold to subprime borrowers in 2010, which represented a 60 percent increase over 2009, when lenders were much less willing to take risks on borrowers.

Now, with banks and dealers in a stronger financial position, many lenders are allowing for bad credit loans again. And the availability of loans is in turn facilitating transacations at the dealership.

"We had people coming to our showrooms that wanted to buy, but we couldn't get them financed," Michael Maroone, CEO of the dealership chain AutoNation told the news source. "We are now getting them the financing."

Drivers who are interested in purchasing a new or used car should consider New Jersey State Auto Auction, where they can choose from a wide selection of vehicles and get financing for their purchase.
 

It's a great time for buyers who are looking to secure a loan for their new or used vehicle, as interest and default rates are down and lenders are becoming profitable again, which increases the availability of credit to all buyers.

Auto sales are also booming, with December of 2010 posting the fastest rate for vehicle sales since the government-sponsored "Cash for Clunkers" program ended. That means dealers are eager to continue selling vehicles and keep the momentum moving.

An example of the positive economic effects in action are the dwindling interest rates on vehicles, according to USA Today. Bankrate.com recently reported an average interest rate 6.21 percent, the lowest rate in nearly two decades of data. Some dealers were even going as low as 2.99 percent.

Edmunds, which also factors in special dealer offers into the average, concurred with the low rates, saying that the 4.16 percent recorded in December was the lowest since the company began tracking rates in 2002.

One of the reasons for this is that banks and lenders are competing for every single customer, causing them to offer lower rates.

"What's really driving our market right now are these low interest rates," Pete Greiner of Greiner Ford Lincoln in Casper, Wyoming, told USA Today. "The national lenders became very competitive."

Ally Financial, for example, which offers both mortgages and car loans, recently reported its fourth straight quarterly profit. The beleaguered lender was forced to accept a government bailout in the midst of the recession, but now appears to be bouncing back. As companies return from the brink, they're able to offer loans to a wider variety of customers, including those with bad or no credit.

Another reason that lenders are confident is their low default rates. A lender collects no money on a loan that defaults, which is why bad credit buyers are riskier than others and must pay a higher interest rate. So with default rates down again this month – currently at a meager 1.68 percent – banks and lenders can be a bit more adventurous with their loans.

New Jersey State Auto Auction partners with a variety of banks and lenders in order to secure loans for customers with all types of credit scores. Drivers in the market for a car loan should browse the wide selection of vehicles and lending options available to them.

Auto loan default rates continued to drop in December as borrowers began to dig themselves out of the financial holes that the recession has helped to create.

Standard & Poor and Experian's joint Consumer Credit Default Indices report that the rate of auto loan defaults declined nearly 5 percent from November to December and now sits at 1.68 percent. That figure was down 36.85 percent when compared with December of 2009.

"Default rates across the four major categories of consumer borrowing declined in December from November and from a year earlier. Nationally, consumers continue to gradually improve their financial condition," said David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P.

The index also tracks default rates across mortgages and bank cards, but reported that auto loan defaults remained the lowest and experienced the biggest decrease out of all types of borrowing.

This news, coupled with that of interest rates dropping for car loans, means that it may be a great time to secure financing for a new or used vehicle.
 

Auto loan rates are at record lows, making it a great time to purchase a new or used car, according to two separate sources.

According to USA Today, both Edmunds and Bankrate have reported interest rates that are among the lowest ever tracked by the two companies. Bankrate claims that the current average interest rate for a four-year new car loan is 6.21 percent, the lowest in two decades. Some dealers are even going as low as 2.99 percent.

Edmunds, meanwhile, also factors in automaker-subsidized loans and special offers into their rate tracking. According to the company, the average rate of 4.16 in December was the lowest since the company began recording rates in 2002.

There are a variety of factors at play that are driving rates down. Automakers made a big end-of-the-year push in order to drive sales higher, but some of the deals have overlapped into January as well. Dealers are also facing competition from banks and other lending institution hoping to expand their loan portfolio now that the economy is improving, which is in turn making them lower their rates.

Paul Taylor, chief economist for the National Automobile Dealer Association, told the news source that it's a great time to trade your vehicle too, as dealers are valuing the used cars higher in order to stimulate sales. 

General Motors has spent $3.5 billion to purchase AmeriCredit, a subprime lender that specializes in providing financing for late-model used cars. The move restores a financial services arm to the automaker, who split from its in-house lender, GMAC, in 2006.

According to CNN, the deal is expected to greatly improve GM’s ability to move its wide variety of cars for sale. An in-house lender allows GM greater financial flexibility in offering financing and auto loans on its vehicles. It also gives those shopping for used cars another option in finding the money to do so.

GMAC, now known as Ally Financial, was GM’s in-house lender for a number of years, but GM sold its stake in the company in 2006. Both companies were later bailed out by the federal government. GMAC, which also offers mortgages, is trying to improve its lending business by only offering loans to consumers with near-perfect credit. While GMAC currently provides loans for GM customers, GM wanted a lender who would be able to offer loans to buyers with poor credit as well.

Some analysts have speculated that GM’s lack of a financial arm, which can be quite profitable, is one of the reasons it is lagging behind rivals like Toyota and Ford in recovering from the downturn.