Americans are reducing their use of their credit cards for the first time in three months, but are offsetting this by increasing use of auto loans, according to data last report from the Federal Reserve.
In April, consumer credit increased at a seasonally adjusted 5.3% annually, or $ 18.6 billion, the report said. Revolving loans such as credit cards declined 2.4% year over year, while non-revolving loans such as car loans, personal loans, or student loans increased 7.6% annually. Mortgages are not included in the Fed’s report.
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The report showed that there is $ 1.24 trillion in auto loan outstanding as of the first quarter of 2021, up from $ 1.22 trillion in the fourth quarter and $ 1.18 trillion in the first quarter of 2020.
Used car prices are currently up 18% year-over-year due to growing demand for cars stemming from the COVID-19 pandemic and low supply, according to data Recent report from Kelly’s Blue Book. As car prices continue to rise, you can save money by lowering your auto insurance premiums. Visit Credible to Compare Rates and Lenders at the touch of a button.
The biggest factor influencing the current state of the car market is the limited supply of used cars. There are about 2.34 million used cars available in America today, according to vAuto. This is more than 530,000 less than a year ago and about 430,000 less than the same period in the more normal 2019.
“America may be slowly returning to some semblance of normalcy, but the car market is not,” said Matt Delorenzo, senior managing editor at the Kelley Blue Book. “This means that the previous experience of people shopping for cars may not be able to tell them exactly how to handle this market. If consumers can even find the car they want right now, they need to be prepared and understand that they are probably going to pay more for it than they probably thought.
“With high demand and low supply, manufacturers don’t offer as many discounts as people are used to seeing; dealerships cannot negotiate without the incentives available, ”Deorenzo said. “And we don’t expect this to change much any time soon – this will be a low-cost market for some time to come.”
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Likewise separate report from the Kelley Blue Book showed that new car prices in April were up $ 864 (up 2.2%) year on year, and $ 92 (up 0.23%) since March 2021.
Of course, historically low interest rates have helped combat some of these rising costs and helped make monthly car payments affordable.
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