Auto Credit Crunch Tightens
Borrowers taking on more debt, moving many into delinquent territory.
The percentage of borrowers late on their payments by 60 days or more rose year-over-year from 1.2% to 1.3% in the first quarter.
RDNE Stock
Automotive debtors' burdens are getting heavier.
A study by Transunion found that average monthly debt responsibility rose 20% over the past two years, far outpacing Consumer Price Index growth.
The credit bureau said the average monthly auto loan payment has climbed steadily since the first quarter of 2022, from $1,345 to $1,583 in this year’s first quarter. It said that’s almost double CPI increases over the same time frame.
So it’s not a surprise that delinquencies have gone up during that period. Borrowers late on their payments by 60 days or more rose year-over-year from 1.2% to 1.3%.
The turn of events is curtailing deliveries, despite revived inventory and increased incentives, Transunion said.
“Just as auto inventories began to recover from the worst of the pandemic era supply chain shortages, elevated inflation and higher interest rates that followed have put consumers in a tight financial bind,” said Executive Vice President of Financial Services Jason Laky in a press release. “As a result, many have been taking on additional and larger monthly payments each month to service higher debt levels. This has likely contributed to some consumers holding off on buying or leasing a new auto.”
The debt pressures are particularly affecting below-prime borrowers, the bureau said.
Originally posted on Auto Dealer Today
More Auto Finance
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Auto Lenders, Consumers on a Tightrope
April borrowing data shows that more consumers are bending over backward to buy vehicles, though subprime lending cooled off for the month.
Read More →
Toyota Financial Services President Replaced
Scott Cooke has served in various roles with Toyota Financial Services for over 20 years, including president and CEO, which he retires from on June 30.
Read More →