FAYETTEVILLE, Ark. — For the first time in years, banks are growing their share of auto loans faster than, and at the expense of, captive finance companies. One of the primary reasons for this shift is that banks are getting much more aggressive in their rates and terms for auto loans due to soft loan demand in other areas, primarily commercial and development loans.
Automobile loans have been increasing nationwide for the past several years 6.7 percent from 2011 to 2012 and 10.2 percent from 2012 to 2013.1
A recent study by Experian Automotive2 shows that banks hold $290 billion in outstanding loans for the first quarter of 2014, while captive financing companies hold $221 billion. Additionally, year-over-year data from this same study shows that bank loan balances have increased 13.8 percent while captive loan balances have only increased 4 percent. (See Experian pdf attached)
For consumers, this aggressiveness from banks can mean a better deal because, armed with a low-rate auto loan from a bank, they can negotiate with a car dealer strictly on the price of the car. Previously, when banks were charging market rates for auto loans, consumers were often best served getting their car loan from the auto manufacturer’s finance companies so they were, in effect, negotiating both the financing and the car price at the same time. But with banks offering auto loan rates as low as 2.5%, consumers might now be best served financing their autos through a local bank and negotiating only the price of the car on the car lot.
Arvest Bank believes is positive for consumers because financing through a bank means consumers can approach purchasing a vehicle with more negotiating power, and also because consumers gain full, local service throughout the duration of the loan.
1FDIC 2014 call report data
2Experian Automotive “State of the Automotive Finance Market, First Quarter 2014”
Arvest Bank has seen auto loans increase significantly – more than 13 percent since 2011. This reflects their frequent and aggressive loan sales (auto loan rates between 2.49% APR and 2.99% APR) as well as the personal customer service that they are most known for.
Banks, auto dealers and businesses pay close attention to shifts in consumer attitudes and behaviors. A new resource for evaluating consumer trends now is available. Arvest Bank released additional data on consumer spending trends and sentiment through their Consumer Sentiment Survey Index measuring the economic expectations and outlook of consumers in Arkansas, Missouri and Oklahoma. More than 1,200 consumers in the three-state area completed the phone surveys in June and July. Learn more by visiting www.arvestconsumersurvey.com.
Advertised 2.49% APR available for 48-month term for consumers with 700 minimum credit score, or Arvest offers 2.99% APR for 60 months and 3.49% APR for 72-month terms. All are limited to new loans with balances from $5,000 to $150,000. Refinances of existing Arvest loans may qualify with an increase of 50 percent of current loan balance or $5,000, whichever is greater. All loans subject to credit approval, collateral restrictions may apply. Advertised rates are available at all Arvest locations; however, this offer excludes all loans secured by real estate and transactions originated through Arvest Mortgage. Offer valid June 1 through July 31, 2014. Cannot be combined with any other offer.