Car loans now top $1 trillion as delinquency rates rise

DETROIT — Americans are borrowing more than ever for new and used vehicles, and 30- and 60-day delinquency rates rose in the second quarter, according to the automotive arm of one of the nation's largest credit bureaus.

The total balance of all outstanding auto loans reached $1.027 trillion between April 1 and June 30, the second consecutive quarter that it surpassed the $1-trillion mark, reports Experian Automotive.

More consumers also are turning to leases, which accounted for 31.44% of all new car and truck transactions in the second quarter, up from 26.9% a year earlier.

Both 30- and 60-day loan delinquencies rose, but the combined subprime and deep-subprime share of new and used auto loans and leases dropped from 23.3% in the second quarter of 2015 to 22.8% in second quarter of 2016.

“Yes, subprime and deep-subprime loans are growing, but the entire market is growing from a volume perspective across all risk tiers," said Melinda Zabritski, Experian senior director of automotive finance. "In fact, the subprime loans have actually dropped as a percentage of the total market. That, combined with only a slight uptick in delinquencies, makes clear that the sky is not falling.”

But the growing leverage that is supporting the industry's near-record sales remains cause for concern.

The average new car loan was $29,880, up 4.8% from the second quarter of 2015, and about $4,000 less than the average new vehicle selling price.

Expand this story and read more, tap here


JOIN THE CONVERSATION

To find out more about Facebook commenting please read the
Conversation Guidelines and FAQs

Leave a Comment