Auto Financing Climbs as Credit Card Use Slides, Fed Reports

Auto Financing Climbs as Credit Card Use Slides, Fed ReportsIn a similar trend from months past, Americans in June took out more auto loans and borrowed steadily from federal programs to pay for college tuition, compared to declining credit card usage.
Non-revolving credit, mainly representing student loans and auto financing, jumped by $12.6 billion in June to a non-seasonally adjusted $1.987 trillion, according to Federal Reserve figures released Wednesday.
Revolving loans, which measures credit card spending, decreased by $2.7 billion, the most since June 2012.
Overall, U.S. consumer credit rose less than expected in June. The Fed’s monthly report does not include mortgages or equity lines of credit.
“I think this report speaks to a well-functioning credit marketplace,” Ezra Becker, vice president of research and consulting at the credit bureau TransUnion, told Reuters. “Lenders are offering more credit, and consumers are using it without an over-reliance on credit.”
Apparently feeling more confident about the economic recovery, U.S. consumers have shown an unwavering interest in buying new and pre-owned vehicles, fueling auto financing and longer terms on these loans that carry smaller monthly payments.
Meanwhile, auto leasing is waging a big comeback as these non-purchase financing deals accounted for 27.5 percent of all new vehicles acquired in the first quarter, according to the credit bureau Experian.
That’s the highest level of leasing Experian has recorded since it started monitoring auto financing in 2006.

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