Banks Challenged by Auto Loan Rates

 
The banks and financial institutions are complaining again, and this time it doesn’t have anything to do with the fact that so many people are not paying their loans. Instead, their problem is that they can’t make enough loans. With investors just starting to put money back into the market, the banks are jumping on anything they can get their hands on.
 
Investors are putting their money primarily in stocks and riskier investments, while treasury notes remain unpaid or dumped for something else. This is pushing up long term interest rates, which means the banks don’t have the ability to offer these low rate auto loans that everyone keeps promising you. Instead they can offer auto loans at higher rates – but this simply keeps people from borrowing any money.
 
Now, this also benefits the banks because they can earn money by borrowing it at lower rates from checking and savings accounts, and then lending it at higher rates – so they are not above the fray either. But they are complaining that it is out of their hands – which it really isn’t. Instead of offering these high auto loans they could cut the interest rate which means they would make less than they would otherwise.
 
With old auto loans being paid off or left for dead, the banks are going to have to figure something out. It is a new year and with a new year comes a lot of people looking for new cars – which means a plethora of auto loans if the dealers can get the borrowing power.


 

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