Auto Purchases Up to Boost Consumer Borrowing

If you’re wondering how your neighbors are spending, you don’t have to – they’re taking out new auto loans and buying cars. This is helping consumer borrowing in general, but still isn’t a sign of recovery in consumer spending. Much of the recovery expected to occur this year and next is dependent on the ability of consumers to borrow and buy, in turn stimulating the economy. Borrowing in the auto loan category rose 6.9%, but credit card usage dropped from December to January by 6.4%. Put simply, consumers are still sending a mixed signal. During boom times, consumers borrowing and credit should show signs of growth month over a month. Businesses use these reports when deciding whether or not it’s a good time to expand and grow, which in turn promotes more hiring to complete the growth cycle. This clearly is not the case at the moment, but it seems to be a good sign for the economy nonetheless.

Auto Sales Rebound

Auto sales have rebounded and enjoyed a consecutive six month growth, a sign that the industry may be recovering. Analysts are expecting a growth in all borrowing categories to signal that consumers trust the direction of the economy and are ready to start spending again. If you’re looking for a low auto loan rate, chances are you can find many affordable offers right now from some of the best lenders in the country. U.S. car loan rates are still low across the country. As the economy picks up steam however, the rates are expected to rise again.

Consumers are expected to once again take on more debt, but not in same way that they were during the housing boom when credit and borrowing money was cheap and easy. Consumer credit totaled $2.41 trillion, while consumer borrowing stood at about $5 billion in January. If you’re looking for new or used car financing soon, US Banking Rates can help you with that.