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Auto loans reach five-year highs

Dec 03, 2012 Philip Burgess

Debt collection agencies may want to turn their attention to the automotive industry, as auto loan originations between January and August reached their highest total since 2007, according to a recent Equifax report. "Sustained recent consumer demand for auto leasing, financing and purchase has driven a return of this portfolio to pre-recession numbers more rapidly than any other lending sector," said Amy Crews-Cutts, chief economist at Equifax. The auto industry is responsible for a large portion of short term lending, as total loan balances through October exceeded $770 billion. The average loan amount in August reached nearly $19,500, the highest mark in six years, and new automobile loans also hit a six-year high. Auto finance company lending and bank, savings and credit union loans have also increased significantly, reaching five and seven-year highs, respectively. A separate report by J.D. Power and LMC Automotive revealed that auto sales are on the upswing after a minor dip because of Hurricane Sandy. November new-vehicle sales are expected to see a 14 percent year-over-year increase from November 2011, while light-vehicle sales are projected to experience a 12 percent year-over-year growth.