Banks Are Recapturing Auto Loans in Record Numbers

Tuesday, July 01 at 08:50 AM
Category: Arvest News

Banks are capturing a larger share of financing for auto purchases, a trend that means customers are turning to banks more than they used to for auto loans.

LOWELL, 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 .

A recent study by Experian Automotive 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.

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.

This shift in consumer auto lending is positive for consumers because financing your automobile through a bank means you can approach the purchase of that vehicle with more negotiating power. It also means you’ll have full, local service throughout the duration of the loan.

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 as between 2.49% APR and 2.99% APR) as well as the personal customer service that they are most known for. Other banks are also offering special auto loan rates, such as Arkansas based Simmons Bank offering auto loans at 3.49% APR.

Banks, auto dealers and businesses pay close attention to shifts in consumer attitudes and behaviors. A new resource for evaluating consumer trends will soon be available. Arvest Bank will be releasing 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 will complete the phone surveys over the next several weeks. The index from the first survey will be released on July 17 and can be found at

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.

Tags: Lending and Financing, Press Release
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