Experian, which tracks auto loans as well as consumer credit scores, reported the total amount of auto loans in the first quarter of 2016 exceeded $1 trillion for the first time ever.
In all, the total volume of auto loans, which includes leases, is up 10% from the same period a year ago, according to the latest data from Experian
“We’re still seeing strong sales projections which will help fuel this growth,” said Melinda Zabritski, Experian senior director of automotive finance.
The total balance of open automotive loans climbed 11.1% in the first quarter of 2016, surpassing the trillion dollar mark for the first time on record. Loan balances reached $1.005 trillion in Q1 2016, up from $905 billion in Q1 2015, according to the most recent State of the Automotive Finance Market report.
Open leases grew by 27.55% to an all-time high of $76.9 billion, up from $73.1 billion the previous year. The market first reached the trillion dollar mark — with the combined total balance of open loans and leases — in Q3 2015, the Experian report noted.
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“Automotive financing certainly has started off the year with a bang, seeing steady growth in balances and loan volumes throughout the first quarter,” said Zabritski.
“With more and more consumers relying on financing, it is important for lenders to keep a close eye on delinquency trends to ensure the market remains healthy. Likewise, consumers need to continue making their monthly payments on time to keep affordable financing options open and available.”
After hitting an all-time high 17.46 million vehicles sold last year, the auto industry continues to enjoy strong sales. For the first four months of 2016, the pace of sales was more than 17 million vehicles, with the busy summer season expected to push that pace even higher and sales are expected to remain steady during while average transaction prices or the amount consumers pay for new a vehicle also continue to rise.
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Findings from the report also show that while there were increases in both 30- and 60-day delinquency rates, the overall percentage of total delinquent loans remains relatively low when compared to pre-recession levels.
In Q1 2016, the percentage of loans and leases considered 30-days delinquent was 2.1%, up from 2.02% in Q1 2015. Additionally, the percentage of loans and leases considered 60-days delinquent grew from 0.57% to 0.61% over the same time period.
The volume of vehicle loans and leases held by nonprime and subprime consumers increased by 9.5% and 10.9%, respectively. Prime consumer loans and leases increased by 8.9%. Finance companies and credit unions saw the largest growth in loan and lease market share, growing 25.6% and 15.9%, respectively.
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However, banks continued to hold the top position in automotive loan and lease volume, growing 7.9% compared with the previous year to reach $349 billion in marketshare.