Consumers taking on more debt across several categories

The economy has been slowly improving for some time now and even as certain aspects, such as unemployment, continue to stall, consumers seem to be feeling better about their ability to take on and successfully handle new debt loads.

New auto loans, credit cards and student loans are now cropping up all over the country as consumers see their personal financial situations improving, according to the latest National Consumer Credit Trends Report issued monthly by the credit monitoring bureau Equifax. As a result, the number of new credit accounts of all types opened in the first six months of the year began to approach the levels seen prior to the onset of the recent national recession.

Car loans getting more interest
Perhaps the largest gains in this regard have come in the auto industry, as consumers are once again flocking to obtain new vehicles and taking out sizable loans to do so, the report said. Through the end of June, total new auto lending nationwide climbed to $207 billion, up 13.7 percent from the first six months of 2011. That was spread across 10.7 million new loans, the largest six-month total seen since 2007, when there were 11 million.

"The average age of cars on the road today in the US is the highest ever recorded and consumers are ready to replace these older vehicles," said Equifax chief economist Amy Crews Cutts. "At the same time, the financial picture has improved sufficiently that we are seeing auto lending markets become facilitators rather than obstacles to meeting this demand, especially in the near-prime segment of the market that had all but ceased to exist during the worst of the financial crisis and recession."

In all, smaller vehicles dominated new car sales, increasing 15 percent from their positions last year, the report said. This was largely because consumers looked for more fuel-efficient options that will help them save money in other ways.

Further, delinquency and write offs for auto loans are also well below the levels seen at the beginning of the recession, the report said. Through August, the dollar volume in these risky accounts was at about one-third of the levels seen in March 2009, and write offs are at less than half of their all-time peak.

Credit cards continue to gain steam
Along the same lines as auto loans, consumers seem far more eager to begin taking on credit cards than they have been during the past few years, the report said. Through the end of June, new account origination for bank-issued cards is up 36 percent from the lows seen at the height of the recession, rising to $87.3 billion in possible balances from $55.5 billion in 2010. That was on more than 300 million new cards, the largest number observed in 28 months.

In all, the amount of credit available to consumers on these accounts has been on the rise since February 2011, but the rate at which consumers used them had been dropping since May 2012, the report said. Through August, the amount of money borrowed on these cards was 22.4 percent of the available $1.87 trillion credit limits, up only slightly from the five-year low of 22.1 percent seen in May.

Similarly, retailer-issued credit cards also surged, with new available balances rising 15 percent on a year-over-year basis, to $30.4 billion in June from $25.8 billion in 2010, the report said.

Student loans continue to rise
However, one type of borrowing that consumers may consider to be necessary, and which has been rising throughout the recession, was student loans, and that trend continued in the first half of the year, the report said. New student financing credit jumped 15 percent to $30.3 billion through June, up from $25.6 billion in the same period in 2010.

More problematic was that write offs on these types of balances rose more than 10 percent through the end of August, to $10.6 billion from 2011's $9.5 billion, the report said. This may be partly the result of average student loan borrowing rising to $9,467 through June, 67 percent more than the $5,660 seen at the lowest point of the recession. However, the average loan size on a per-student basis is growing more slowly than the total amount of student borrowing.

Whenever you're obtaining any new type of financing, it can be important to first order a copy of your credit report. This may help you identify any potentially unfair markings that could harm your credit score and prevent access to credit you otherwise deserve. Fortunately, working with a credit repair law firm may help to clear up such issues.