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Experts bullish over increased consumer borrowing

Aug 21, 2013 Walt Wojciechowski

The economic recovery continues, with consumer credit reports becoming more favorable, allowing Americans to borrow more capital than in previous years. Although the economy has some way to go before a return to robust, continuous growth can be assured, experts are optimistic about the improving trends regarding consumer spending.

According to The Wall Street Journal, lending rates for vehicles, homes and other major products have been on the rise. The source reported that auto lending spiked by $20 billion during the second quarter of 2013, the biggest increase recorded by the Federal Reserve Bank of New York in the last several years. More credit card activity was also seen last quarter among American consumers.

Even with the improving auto lending trend, overall debt totals declines during the most recent quarter. The source indicated that outstanding credits dropped by $78 billion, its lowest level since 2006. However, it's not necessarily a sign that consumers are holding back on spending and lending. Rather, the The Wall Street Journal reported that the decrease was likely a result of foreclosure write-offs and booming home sales that have allowed many consumers to close older debt accounts, which could be beneficial to lenders in the coming months.

Consumers taking charge of finances
Addressing these older accounts may mean that more Americans are better placed financially to take out additional loans in the near future as consumer credit scores improve on the back of the closure of outstanding, possibly overdue, credit accounts.

Financial expert Ezra Becker told The Wall Street Journal that families across the country have taken active steps to managing their finances more effectively in the wake of the Great Recession. With more sound financial footing and an improving job market, many Americans are expressing more confidence in the economy, which Becker believes could drive spending and loan activity in the coming months.

Although there have been more positive signs than negative ones, lenders should be aware of the barriers that may limit spending on the part of some consumers. The Washington Post noted that salary stagnation may be enough to prevent some Americans from borrowing and spending more in the coming year. These common concerns held by many purchasers across the country should be taken into consideration when lending outlets create credit products. Building loan solutions that can be useful and attainable in the current economic setting can help a lender beat the competition.