Credit Surge on Auto Loans


Recent evaluations by Equifax on consumer credit trends have shown a remarkable increase in the loan disbursement for automobile acquisition in the terms of $52.5 billion as of May 2012. This is a 49% increase from the recession period low of March 2009, valued at $26.9 billion.  Moreover within the period between January and March 2012, banking institutions recorded a value of $47.5 billion credit on automobiles only which was 25% more than in the 2010 recession low valued at $35.9 billion, also a feat not seen since seven years ago.

The trend in the sector is on a steady climb as the credit institutions are registering increasing outstanding automotive loans in the trends of 57 million, a remarkable peak not reached since February 2010; in addition, the auto loans are on a steady climb and have already reached a $740 billion mark as per May 2012 which is a 3 year high.

Contrary to expectations, in cases of high lending the number of loan defaulters on auto loans is on a 5 year low with high repayment records a feat similar to the conditions of the pre-recession period. Lending institutions are registering high incomes as  the fee charged on borrowers for credit risk valuation is on a seven year high in the terms of $5.2 million as from March 2012 to –date outranked only by the March 2007 peak of $5.3 million. The trend is the same all round, as statistics from auto loans institutions indicate a 46% rise in value of auto loans funded by them from the recession low of March 2009 valued at $ 577,900 to $1.06 million and same period this year a milestone not recorded in five years. Similar scenarios have also been registered by banks and SACCOs as auto loans have increased by 21% from $741,000 in the March 2009 recession period to $933,900 as per March this year. As of May 2012 the lump sum of auto loans has been valued at $740 billion which is a remarkable increase of $43.1 billion from the previous year over the same financial period.