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Auto Loan Balances Reach New High in Q4, Experian Reports

Open automotive loan balances reached a new high in the end-of-year quarter, while delinquencies stayed below prerecession levels, according to Experian Automotive’s fourth-quarter data.

by Staff
February 25, 2014
2 min to read


SCHAUMBURG, Ill. — Consumers continued to make their loan payment on time, Experian’s Automotive fourth-quarter data showed, with 30-day delinquencies falling 3.5% from a year ago and 60-day delinquencies remaining flat at 0.74 percent of all open automotive loans.

The quarter also saw outstanding automotive loan balances rising 11 percent from a year ago to $798.5 billion in the fourth quarter — the highest level since Experian Automotive starting publically reporting the data in 2007. The increase in open loans spanned across all lending types, with finance companies showing the greatest increase of 21.2 percent from a year ago. Open automotive loans for credit unions, banks and captives increased 13.2%, 10.5% and 5.3%, respectively.

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“The automotive finance market continues to move along at a very healthy pace, and we are pleasantly surprised by the continued drop in delinquencies,” said Melinda Zabritski, Experian Automotive’s senior director of automotive finance. “The record level of open loan balances combined with the reduction in late payments shows that consumers who have purchased a vehicle are not only reliant on financing, but also firmly committed to making their payments on time.”

The report also showed that repossessions were up 42.8 percent from a year ago, the rate rising from 0.46 percent to 0.65 percent. However, Zabritski noted, the increase was driven entirely by finance companies, which traditionally provide financing to credit-challenged customers. In the fourth quarter, that segment nearly doubled its repossession rate, jumping to 2.84 percent from 1.61 percent in the year-ago period.

The repossession rate for banks dropped from 0.24% in the year-ago period to 0.23%, while the rate for captives fell 0.36% to 0.34%. The rate for credit unions also dropped, falling from 0.16% to 0.15% in the fourth quarter.

“The increase in repossessions by finance companies could simply be attributed to a tightening of repo standards,” Zabritski explained. “Aside from this increase, we are seeing the rest of the automotive finance industry trend positively, creating optimism for a strong 2014.”

Additionally, the share of open loans in the nonprime, subprime and deep subprime segments rose to 36.2% from 35.7% in the year-ago quarter, while the percentage of loan dollars 30-delinquent rose slightly from 2.22% in the year ago to 2.26%. The percentage of loan dollars 60 days delinquent rose slightly from 0.55% to 0.58%, while the average charge-off amount for loans gone bad jumped from $7,277 in the fourth quarter 2012 to $8,520.

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