Why are people making their car payments in record numbers? They don't want to lose their car.
"They need their cars," said Pacific Car salesman J.P. Bo. "They need it to take their kids to school, they need it for work."
In fact according to the credit reporting agency TransUnion, delinquency rates for car loans are at their lowest level since the company began tracking car payments 13 year ago. The rate is down 25% from a year ago. A car payment is considered delinquent when the loan is 60 days past due.
San Diego State University Marketing professor George Belch says some people make their car payments before paying off other loans.
"They may do some maneuvering with their credit card payments," said Belch, "I think most consumers are going to look at their automotive loan and say, I must pay this at all costs."
Not only are drivers making their payments but they are buying more cars. U.S. auto sales this year are up 14 percent. At the same time cars on the road average over 10 years, that means there could be a pent up demand for newer cars.
On top of that, Bo says special incentives and record low interest rates are making a huge difference on the car lot.
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"I feel very optimistic about the business right now," said Bo.
But to take advantage of low cost auto loans you must have a high credit rating. The more people who make their car and other payments on time, the more people who will be eligible for those record setting interest rates.
"I think people today know that they have to pay off their debt," said Belch.
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