Record-low interest rates have propped up a slow-to-recover housing industry. Even lower rates are helping the auto finance industry explode, with many firms seeing exponential growth — and consumers getting great deals.
Many drivers who have been riding out the recession in older vehicles are now racing out to get cheap loans.
“People have held on to their cars for a long time, and there’s pent-up demand,” said Mark Sheinbaum, CEO of Chase Auto Finance, part of JPMorgan Chase & Co. Chase has been offering auto loans for as little as 2.53 percent in some areas.
Consumers who aren’t ready to buy have been refinancing their cars, trucks or SUVs, saving hundreds of dollars a month.
The low rates on auto loans have been a boon to lenders, according to Helen McGiffin, chief operating officer for Miramar, Fla.-based Tropical Financial Credit Union. Tropical Financial was offering loans as low as 1.49 percent this week for a new or used vehicle.
“We’re up over 46 percent in consumer loans in a year, thanks to the auto loans,” she said. “That’s a pretty hefty increase.”
Lenders are finding they have to offer the cheap loans to stay competitive with the automakers that are subsidizing low-interest loans at dealerships — some of them charging no interest, McGiffin said. “Consumers are now used to 0 percent loans,” she added.
“It’s common sense. People are going to refinance if there’s a good opportunity,” said Mel Campbell, a spokesman for Regions Bank.