Outstanding Auto Loan Balances Reach Record High, Experian Reports
The total dollar amount of automotive loan balances outstanding hit $839.1 billion in the second quarter of 2014, up 11.7% from the previous year. Officials said the industry should watch this trend closely, as it may dictate the availability of credit in the future.
SCHAUMBURG, Ill. — The total dollar amount of automotive loan balances outstanding hit $839.1 billion in the second quarter of 2014, up 11.7% from the previous year, according to Experian Automotive’s latest State of the Automotive Finance Market report.
Further findings from the report showed that, while still at near historic lows, 60-day loan delinquencies increased by 7% to 0.62% in second quarter 2014 from 0.58% the previous year. Additionally, 30-day delinquencies showed a slight increase, going from 2.38% to 2.39% over the same time period. Moreover, the total balance of loans that are 60-days delinquent has increased by $859 million since second quarter 2013, while the balance of 30-day delinquent loans has increased by $2.8 billion from a year earlier.
“The rosy glow of perfect payment performance in the automotive space is beginning to tarnish,” said Melinda Zabritski, senior director of automotive finance for Experian Automotive. “We’re starting to see a slight uptick in the number of consumers struggling to make their automotive payments on time; however, we have to keep in mind that these percentages are still extremely low. We’ll want to keep an eye on how consumers pay their bills in the coming months, as it may dictate the availability of credit in the future.”
Experian Automotive also found that the overall automotive repossession rate saw a significant increase in the second quarter of 2014, jumping more than 70% to 0.62% from a year earlier. Finance companies were the only lender type to see a year-over-year increase in repossession rates, rising from 1.13% in second quarter 2013 to 2.75% in second quarter 2014.
All lender types experienced growth in year-over-year quarterly loan volume, with banks up by $31 billion, credit unions up by $25 billion, finance companies up by $24 billion and captive finance companies up by $9 billion. The average charge-off amount in Q2 2014 was $8,149, up $932 from the previous year, according to the report.
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