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Americans are Borrowing Again

As auto loans and credit apps rise, it appears Americans are more willing to take on debt.

July 8, 2021
Americans are Borrowing Again

Equifax reports demand for auto loans and leases, general-purpose credit cards and personal loans rose 39% in April 2021.

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2 min to read


As the U.S. emerges from the pandemic, Americans are borrowing at higher levels than in 2019. 

Equifax reports demand for auto loans and leases, general-purpose credit cards and personal loans rose 39% in April 2021, compared with April 2020. The credit reporting bureau reports this figure is 11% higher than April 2019.

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Lenders responded to heightened demand by extending a record number of auto loans and leases in March, reported Equifax. They also issued more general-purpose credit cards than any other March on record. 

The trends mark a change of course from 2020, when consumers avoided credit cards, personal loans and other debt. Though stimulus checks, expanded unemployment benefits, and a surging stock market may have limited consumer borrowing, many people avoiding borrowing amid layoff fears. 

Now, pandemic behind them, Americans are buying at unprecedented levels. Higher prices on new and used vehicles are also boosting loan demand. 

Lenders also seem more willing to take on consumer loans than during the pandemic. Big banks that tightened underwriting requirements in 2020 are now relaxing those tighter standards.

According to Mintel Comperemedia, lenders mailed 127 million personal-loan solicitations to people’s homes in May, up from 60 million in 2020.

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The pandemic spurred many Americans to pay down debt. While good for consumers, it concerned lenders that rely on increasing loan volumes to make money. These lenders hope to spur borrowing with more credit-card originations that leads to more consumers carrying balances, and paying interest on those balances, from month to month.

Equifax also reported lenders originated around three million auto loans and leases in March, up 53% from over 2020, and marking the highest monthly figure on record. The credit reporting agency reported balances for new originations also hit a record of $73.6 billion in March, up 59% from a year prior. In addition, lenders approved six million general-purpose credit cards in March, up 32% from a year earlier and the highest March figure on record.

JP Morgan & Co. reported 17% higher customer spending on credit cards in May compared to the same month in 2019. The company expects the trend to continue throughout 2021, said Gordon Smith, the bank’s co-president, at a conference in June.

Some lenders are even extending more credit to consumers with low credit scores. Lenders approved 1.4 million general-purpose credit cards for subprime borrowers in March, up 28% from 2020 and 25% from 2019. In the automotive world, lenders approved around 602,000 subprime loans and leases, up 31% from a year before. Lenders report balances on these auto loans and leases totaled $11.7 billion, the highest on record.

Originally posted on Auto Dealer Today

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