Like many people, the recession hit me pretty hard. Thanks to a job loss, I got behind on some of my credit cards. Even though I did mange to make the mortgage payment every month, my credit rating nose-dived. While things did get better, I still wondered if it would be possible to refinance my mortgage with bad credit. After talking with a few lenders, I found out that my situation was not unique. I also found lenders who were willing to work with me. I managed to get terms that will save me money over the life of that mortgage. If your credit has taken a beating, don't assume that refinancing is out of the question. I'll share how I researched options and found a lender who offered a good deal. You could find that refinancing your mortgage is within your reach.
For auto loans, vehicles are used as collateral to secure loans with fixed monthly payments rather than paying the cash upfront. This is mostly done by lenders of used cars, new cars, commercial vehicles, and two-wheelers. The Covid pandemic resulted in a downward trend in the financial stability of most Americans. Their daily routine changed; thus, people had to stay in their houses and were less mobile. It is important to note that this was a precaution for staying because of the fear of contracting or spreading the virus. As many people adapted to the new norm of working remotely, delivery service providers boosted their operations since the demand was high and people were not using their cars regularly. Therefore, such changes in the market made people more concerned about the effect this would have on auto loan finance.
According to Experian, despite Covid conditions, consumer auto loans recorded a balance of $1.37 trillion in 2020. Such data shows a slight difference compared to 2019. Despite a sudden halt on commuting or traveling activities, the pandemic did not negatively impact the automotive financing market. In this case, auto loans increased their balances compared to other consumer debts.
Growth of Average Consumer Debt Balances
Considered as improvement from the 2019 average balances growth, the 2020 balances that consumers owed reached 3%, thus attaining an increase of $634. Such data reinforced the lack of negative impact on consumer auto debt amid the pandemic. A little comparison between the above data with other consumer debt shows that between 2019 to the third quarter of 2020, students loan too grew by only a margin of 9%, whereas credit cards dropped by 14%.
Though the automotive finance market had foreseen valuable trends, Covid 19 disrupted the pattern as fewer people took auto loans.
The government played a crucial role by aiding students and citizens with relief through CARES act. Through this act, students were offered relief since loans were put on hold. Auto loans suffered huge losses since those affected by the pandemic received leniency from mortgage lenders. Auto loan financing had no government intervention; hence, each debtor had to find their way around by selling the car or refinancing.
Technology has also played a role in shaping auto loan collections and services. It is less costly to repossess a car since many lenders use some current technologies. For instance, some lenders need access to GPS locators to know where the car is physically parked and block the borrower who has missed payments. License plate recognition is also being used to locate cars on the hot list of repossession cars. It is also important to understand that such technologies negatively impacts some communities, thus, the low need for auto loans.
Given the sharp increase in the cost to buy a vehicle, America must have a properly functioning auto lending market. Since the present economic recovery is uneven for most Americans, some clients were hit harder financially due to Covid 19. However, some incentives are aligned between consumers and firms to ensure that the consumers are treated fairly.Share
28 March 2022