A car made out of U.S. money
Auto lenders contributed $126 billion to the nation’s gross domestic product in 2023, or about 0.5% of the total, according to a study released Monday by a consumer lending group.
The American Financial Services Association (AFSA), which represents consumer finance lenders, commissioned the study from Oxford Economics, a private company launched by Oxford University in 1982.
The researchers examined Equifax data reflecting 2023’s estimated 30.2 million auto loans for $727 billion, which supported 44% of total value of purchases that year. About 93% of the value was from loans and the remainder from leases.
The impacts were measured at three levels:
- Direct: $35.9 billion and 260,000 jobs from vehicle finance providers suppling capital and financial services to borrowers throughout the life of the loans.
- Indirect: $29.8, 200,000 jobs from lenders spending money with suppliers who employ staff and generate GDP.
- Induced: $59.8 billion, 210,000 from employees (including their suppliers) spending their wages in the economy.
In addition to the GDP contribution, Oxford Economics estimated that auto financing supported 680,000 full-time equivalent jobs and $24.6 billion in tax revenue to the federal, state and local governments in 2023.
By comparison, dealers and others involved in selling cars generated $532 billion, or about 2% of 2023’s GDP. About $247 billion was created directly.
Beyond the numbers, the researchers said car lending provides other valuable benefits to consumers and the economy as a whole.
“Vehicle financing plays a crucial role in facilitating the purchase of a durable ‘big-ticket’ item, namely a motor vehicle,” they wrote. “Providing immediate access to funds accelerates economic benefits, including customer access to education and employment opportunities, that otherwise might have been postponed to subsequent years.”
Auto loans accounted for about 9% of the total consumer debt balance in 2023, more than the value of student loans, and were only exceeded by mortgages.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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