Americans’ passion for cars and debt has zipped across a new stretch of road.
Borrowers took out $101 billion in car loans over the past year, outstripping the pace of growth for other kinds of consumer debt, according to figures released by the Federal Reserve Bank of New York.
By comparison, student loans grew $72 billion while mortgages increased $20 billion. On a quarterly basis, auto loan growth is the highest in a decade, the Fed said.
With the latest data, the amount of auto loans outstanding crossed $1 trillion for the first time. Americans have now racked up more than $1 trillion in both auto loan debt and student loan debt, which surpassed $1 trillion for the first time in 2013.
The acceleration comes amid looser credit standards, seen in a car loan rejection rate as low as 3.3 percent, the least since the New York Fed began collecting that data.
“There was some tightening in auto loan standards after the financial crisis, but by many measures it’s returned basically to where it was pre-recession,” said Wilbert van der Klauw, an economist with the New York Fed.
The bond market is financing the loans as investors scoop up more securities that are tied to bundles of packaged auto loans. A total of about $73 billion in auto-loan-backed bonds have been sold this year, according to Bank of America Corp., which expects full-year bond sales from car finance firms to reach $125 billion, compared with $101 billion in 2014.
U.S. auto sales may top 17 million this year for the first time since 2001, according to Kelley Blue Book.