Car Loans Boost Consumer Loans in America

 The consumer loan rate in the United States crept up in July 2020, one of which was driven by car loans.

The Federal Reserve (The Fed) reported the size of loans in July reached 12.2 billion dollars, up 3.6 percent compared to June.

Car Loans Boost Consumer Loans in America

Earlier, in June, the lending rate also rose 3.3 percent, in contrast to sharp declines in March, April and May.

As quoted by from Bloomberg, Wednesday, September 9, 2020, loan growth in July came from an increase in car loans and student loans of 12.5 billion dollars.

Meanwhile, the category that includes credit cards fell 293 million dollars, down for the fifth straight month in America.

The improvement in consumer loans or car loans is in line with the recent increase in retail sales, especially the purchase of motor vehicles.

Despite the increase in auto loans, consumer sentiment in America remains weak.

The expiration of $600 in unemployment benefits is expected to impact spending and borrowing on American consumers in the coming months.

Consumer loans are a signal and illustrate the willingness of consumers to take on more debt for their expenses.

Consumer spending accounts for at least 70 percent of American economic activity.

The Covid-19 pandemic has also brought most businesses in America to a halt and caused millions of people to lose their jobs. Consumer spending fell 34.1 percent in the second quarter.

Meanwhile, the impact of the Covid-19 pandemic caused American automotive sales to weaken to 13 million units, down 4 million units from last year's sales realization which touched 17 million units.

Regional Director of State Government Relations General Motors (GM) Brian O'Connell said his company had experienced poor conditions after closing factories at the start of the pandemic.

Until now, GM car sales slumped 20 percent. This was also accompanied by a reduction of 20,000 jobs.

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