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March 8, 2010

Consumer credit data offers auto dealers reason for optimism

Auto dealers may have more reason for optimism about the economy and their potential to make more sales now that government data has found an increase in non-revolving credit debt for a second consecutive month.

Non-revolving credit applies primarily to vehicle loans, from cars to boats. For January, the amount of non-revolving credit debt nationwide was up 5 percent on an annualized basis to $1.59 trillion. For December, the figure saw a gain of 3.7 percent, annualized.

The two-month trend offers a somewhat more favorable outlook in light of non-revolving credit data levels that fell consistently throughout 2009, marking a 1.1 percent overall decline for the year. Non-revolving credit totals peaked at just over $1.6 trillion at the end of 2008.

Looking ahead, various media outlets have already noted that a number of lending institutions have been loosening their credit standards somewhat in light of a slowly improving economy. At the height of the recession, only people with the highest credit scores were seen as likely to secure favorable auto loan terms.

This is good news for auto dealers because it means that more people will find it easier to secure the affordable financing required to make a new vehicle purchase more feasible.
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