Auto-lending is loosening up and rates are dropping thanks to a trillion-dollar government program which guarantees auto-loans sold to investors. Interest rates are at their lowest point since December of ’08, and December 2009’s sales figures for cars and light trucks is expected to be the highest since cash-for-clunkers ended in August.
While the financial arm of the industry is loosening up, not everyone should be jumping for joy. Yes, those with top-tier credit can find rates in the 5’s, but those with bad credit are actually paying rates higher than before. Banks are still apprehensive to lend to high-risk borrowers.
The program, dubbed TALF, or the Term Asset Backed Loan Facility program, began last March and is scheduled to conclude in March of 2010. The question remains however on whether or not the market for securitized loans is one that can stand on its own. Only time will tell.
– By: Stephen Calogera