The Average American FICO Hits All-Time High (692)

As the recovery from the recession of 2008-2012 continues, the good news for the creditworthiness of the average American continues to improve. The latest proof of Americans individual recovery is that the average FICO score hit 692 in April, 2014.

That is a one point gain over April, 2013 and a six point jump over the recent all-time low of 686 set in April, 2009. FICO has only been tracking the average credit score since 2005, so it is possible that it was higher prior to that. To place the 692 score in perspective, it sits on the high end of ”Average”. FICO offers scores that range from 300 to 850. A person must have a score between 700 and 749 to have a credit rating of ”Good” and a score of at least 750 to achieve a rating of ”Excellent”.

Result of Increased Financial Responsibility?

Anthony Sprauve, senior consumer credit specialist at FICO, believes that the higher average score is tied to an improved sense of financial responsibility since the recession ended. He went on to say,

”After the recession, consumers have become better stewards of their financial house; they’re paying more attention to their finances. They’re more educated and more aware, and I also think there are fewer confusing financial products in the marketplace.”

One possible factor in the improving credit scores could be that Americans have become more cautious with the amount of debt that they are taking on. Since credit utilization is a major aspect of credit scores, accounting for thirty percent of a credit score, it is easy to see how a lower debt load could be leading the upward tick in scores.

Tighter Controls on Credit

Another possible factor contributing to the higher score could be the tighter controls on credit. The leading factor behind the recession and lower credit scores was sub-prime lending. Many creditors were offering mortgages to borrowers who had questionable credit histories. In addition, many of these borrowers had payments that drove their budgets over the brink, causing a huge wave of defaults on all types of credit. The tightening of lending guidelines has eliminated some of the risky loans. This has led to fewer defaults and less frequent negative reporting to credit agencies.

Lenders are not the only one’s contributing to the financial stewardship being seen post-recession. Sprauve puts it succinctly:

”There was so much press about people mismanaging their credit, not paying close enough attention, not being active stewards of their financial ship. That was a wakeup call for a lot of Americans to change that behavior, to not trust lenders to do the right thing for them, that they need to do the right things for themselves, that they have to take ownership.”

We have long believed that Americans could achieve better credit ratings through education and awareness. This news seems to prove that theory in spades.

Tesla and the Fight for Direct Auto Sales

Tesla Model S
Image: Wikipedia

The Tesla S is the electric vehicle that threatens to topple the old EV paradigm, the notion that an electric vehicle has to be ugly, slow, and only appeal to the green fringe of society.  In fact, arguably it’s already accomplished that toppling.  It is now the most popular car in many of the wealthiest neighborhoods in the nation, showing that people with the necessary means will indeed spend money on and drive electric vehicles, and it is, almost unarguably, one sweet and handsome ride. Also, let’s not forget it’s performance:

Tesla S Model Battery 0-60 MPH Top Speed EPA Combined MPG
Base 60 kWh 5.9 seconds 120 MPH 95 MPGe
Signature 85 kWh 5.4 seconds 125 MPH 89 MPGe
Performance 85 kWh 4.2 seconds 130 MPH 89 MPGe

Quite the results from an electric car. No wonder it won the 2013 Car of the Year Award from both Motor Trend and Automobile Magazine, and was given the highest score by Consumer Reports…ever!

But given the man behind the company, these results might not be so surprising.  Elon Musk, known as one of the most “disruptive” entrepreneurs of the last decade, co-founder of PayPal and mover-shaker in both aerospace and solar power as well. Perhaps not as headline-worthy, but just as industry-shaking, is the Tesla’s–and Musk’s–push for direct auto sales, circumventing traditional dealerships to sell consumers cars through their own Tesla showrooms.

Dealer Pushback

To even this industry observer, let alone the run-of-the-mill consumer, it would seem logical, fair, and unsurprising that Teslas would be sold at Tesla dealerships.  However, automobile dealer associations across the nation are lobbying hard against the practice, claiming that direct auto sales are in direct violation of franchise rules, sidestepping dealers entirely. So far, the following states have attempted to restrict and/or ban Tesla direct sales:

  • New York
  • Minnesota
  • Georgia
  • Texas
  • Virginia
  • Arizona
  • Ohio
  • Missouri

…and the list keeps growing.  Some states, like Texas, have been successful in this endeavor. In the Lone Star state, Tesla can have galleries (like showrooms), but not only is the company prohibited from selling cars through these facilities, company employees aren’t even allowed to tell prospective buyers how they might purchase one.

Dealer Logic

It shouldn’t be surprising that dealers are pushing back against Tesla’s direct sales. Though Tesla itself may not be that great a threat, the precedent set by the company could open the floodgates for retailers of all kinds, particularly Chinese carmakers. What’s more, franchise laws are important for protecting the financial investment of dealers who have so much capital tied up in vehicle inventory and property. Dealer advocates have also stressed than independent dealer networks enable consumers to compare cars, and serve as pro-consumer intermediaries between their customers and the manufacturers. These arguments, while not necessarily invalid by any means, do seem to lack a certain amount of moral weight or force.

Consumer Logic

Most consumers we’ve spoken with on the subject are actually confused as to why Tesla would not be allowed to sell their cars directly to consumers. This is especially true of consumers who have felt taken advantage of in the auto-buying process in the past, and wonder why they should have to pay a middleman for a product the manufacturer would like to sell directly.

Ford Aiming for ‘Biggest Year’ in History, Hiring 5,000 in U.S.

A Ford spokesperson has said that the American automaker is planning on releasing 16 new vehicles in North America next year and hiring 5,000 new employees. “2014 will be our biggest year for product launches in our 111-year history. We keep investing in product,” said Joe Hinrichs, Ford president of the Americas.

The hourly and salaried jobs will bring to the total number of new people hired by Ford over a three-year time span to 19,000. These newly-hired hands are needed produce the all of the new vehicles that will be launched in 2014, to include the 2015 F-Series pickup trucks and Mustang. Worldwide, the company-that-Henry-built plans on releasing 23 vehicles next year.

Close to 2,000 of the newly-hired hourly employees will work in Ford’s plant here in Kansas City, MO., while 3,300 salaried works will join them next year. Additionally, Ford is planning on opening two new plants in the Asia-Pacific region and one in South America next year as well.

Hear That? Hybrid Vehicles Put Pedestrians on Alert

While owners of hybrids may be doing their part to save the environment, another concern has been brought to light. Because the vehicles are so quiet, they are twice as likely to hit a cyclist. Unfortunately, the issue is with the sound (or lack thereof) of hybrid vehicles. Because these “green” cars are not running on the standard gasoline motors that have exhausts and mufflers which are heard from a distance, pedestrians and cyclists do not hear them approaching. It is not just vision impaired people who are getting hit. Whether they realize it or not, normal vision individuals use the audio queues of engines to look and see where a vehicle is located. When they hear the hybrid vehicles, it is often too late.

“Noisy” Legislation

The Pedestrian Safety Enhancement Act of 2010 dictates that the DOT has to write a rule to address this issue by January of 2014. Back in January of 2013, the NHTSA proposed a rule that must emit a sound when they traveling below 18.6 miles per hour. Above that speed, these vehicles are thought to make sufficient noise through tires and wind resistance. The NHTSA believes this policy would prevent 2800 injuries a year, and save 35 lives. Many automakers have been critical of the proposed legislation. They would prefer that the noise-makers cut off earlier, at 12-13 miles per hour, and they believe that installation of these noise-making devices will have a detrimental impact on sales.

If that is not enough motivation for hybrid drivers to be careful on the road, they should also be aware that repairs on hybrids are still considerably higher in cost compared to non-hybrid or electric cars.

Leases Make Plug-in Cars Cheaper than Ever

Carmakers are clearing their lots of electric cars to make way for cars from the next model year. The result is that now is the time to snap up bargains, with some of the best deals being the low, low cost of getting into a plug-in electric car with a lease.

Nissan, for example, is offering three-year leases for its poorly-named electric Leaf at $199 a month. General Motors, meanwhile, chopped 13 percent off the starting price of its Chevy Volt a couple months ago. If you just used a plug-in to commute, you could very easily replace what you are now paying in gas each month for the lease cost of a plug-in, which would effectively give you an electric car for free.

Of course, to take advantage of such cost savings you need to make sure your daily driving does not exceed the single-charge range of your car. A Leaf’s is 75 miles. According to John O’Dell, a senior editor at auto site Edmunds.com:

“These cars are really designed for people driving 40 miles or less in their daily commute. The more you go above pure electric range, the less attractive these vehicles get.”

If you have been on the fence about opting for a plug-in hybrid, consider that sales of such vehicles were up 36% through September of 2013, and these year-end lease deals will only push those numbers higher. It seems that US consumers are gaining trust in these vehicles, seeing their gas-sipping nature as good for both earth and wallet.

Study Shows Auto Loan Seekers Prefer Digital Banking

According to Accenture research, rates of online loan sales have increased dramatically while brick-and-mortar bank loan sales have declined. One type of loans that customers increasingly prefer to seek online are auto loans. The study predicts that digital banking will continue to outpace branch banking, and by 2020, banks may have lost 35% of their current North American market share.

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