Car Loan Debt Climbed, Credit Scores Declined in 2011

What is going on in Alabama these days? 

The average amount of auto loan debt held by Alabama consumers rose 30% in 2011, compared with a year earlier, according to a survey released by CreditKarma.com. The average amount of auto loan debt in 2011 in Alabama was $20,996, compared with $15,504 nationally. 

The national average of auto loan debt increased 2% from December 2011, according to the survey. Auto loans were the only category (compared with credit cards and mortgages) where the average debt burden increased in 2011. The average amount of mortgage debt remained steady at $173,876 and the average amount of credit card debt decreased 11% to $6,576. 

While the amount of average debt remained roughly the same in 2011 as it was in 2010, credit scores continued to fall. The impact from higher unemployment rates and the continuing economic downturn dropped the average credit score to 660, from 668 in 2010. Residents in California, Massachusetts, and New Jersey can lay claim to the title of having the best credit scores. Each state tied with an average score of 679. Mississippi placed 50th, with an average credit score of 622. 

Higher auto loan balances make sense when you consider that car sale totals were higher in 2011 than a year earlier. And while balances are important, perhaps a more telling number would be the average APR being paid by consumers on that $15,504, especially in light of how credit scores continued to fall in 2011. It also seems like surveys like these are only going half-way in their quest to understand and shed light on consumer credit trends. When it comes to automobiles, doesn’t it make sense to include the amount of money spent on gas and insurance every month, to truly understand what effect the burden of owning a car is having on consumers? 

Food for thought. 

What is going on in Alabama these days? 

The average amount of auto loan debt held by Alabama consumers rose 30% in 2011, compared with a year earlier, according to a survey released by CreditKarma.com. The average amount of auto loan debt in 2011 in Alabama was $20,996, compared with $15,504 nationally. 

The national average of auto loan debt increased 2% from December 2011, according to the survey. Auto loans were the only category (compared with credit cards and mortgages) where the average debt burden increased in 2011. The average amount of mortgage debt remained steady at $173,876 and the average amount of credit card debt decreased 11% to $6,576. 

While the amount of average debt remained roughly the same in 2011 as it was in 2010, credit scores continued to fall. The impact from higher unemployment rates and the continuing economic downturn dropped the average credit score to 660, from 668 in 2010. Residents in California, Massachusetts, and New Jersey can lay claim to the title of having the best credit scores. Each state tied with an average score of 679. Mississippi placed 50th, with an average credit score of 622. 

Higher auto loan balances make sense when you consider that car sale totals were higher in 2011 than a year earlier. And while balances are important, perhaps a more telling number would be the average APR being paid by consumers on that $15,504, especially in light of how credit scores continued to fall in 2011. It also seems like surveys like these are only going half-way in their quest to understand and shed light on consumer credit trends. When it comes to automobiles, doesn’t it make sense to include the amount of money spent on gas and insurance every month, to truly understand what effect the burden of owning a car is having on consumers? 

Food for thought.