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2016 has been a year when the most number of cars have been bought. There were noticeable increases in car numbers as compared to previous years. With increasing car sales, loans have also increased since people go for cars on finance most of the time. There have been significant rises in percentages of loans taken. (Read more)
By the end of 2016, around $1.2 trillion was given to households as loans. This amount is 13% more than 2005 and 9% more from the previous year. The number of vehicles that hit the road increases by 9% as compared to the stats of 2005. 2008 was the year that a record high was set for a maximum amount of loans given. Stats from the year 2016 are just a little below 2008 and could have easily set a new record.
Although there have been steep rises in loans and car finances, the rise in wages has not been as significant, since the year 2009. People are getting more comfortable with getting loans now. It is mainly because the loan payment term period is longer now, the interest rate is low, and people do not have much worry taking a risk while getting a loan these days. Such circumstances have people to borrow money, causing a major increase in the loan stats.
A situation like this is worrisome. The more amounts of loans being given away are affecting the economy on the whole. There has been the increasing in loan payment delinquencies. Around 6 million people from America who got loans are at least 90 days late for paying their loan payment. These loans are having an effect on the car industry which is something to worry about because the car industry alone has a 3% contribution to the GDP.