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Delinquent Car Loans Reach All-Time Highs

Record-setting fourth quarter followed record-setting third quarter.

by on Feb.17, 2017

New car sales set a new record this year. Car loan delinquencies also hit a record high in 2016.

The rate and amount of delinquent auto loans has climbed to its highest level since the end of 2008 when the U.S. was teetering on the edge of tbe Great Recession.

Car loans delinquent by 30 days or more grew to $23.27 billion, the most since $23.46 billion in the third quarter of 2008. They were up from $22.98 billion in the prior quarter. Roughly 3.8% of the loans were delinquent at the end of the fourth quarter, which is up from 3.6% at the end of the third quarter, according to data on consumer debt collected by the Federal Reserve Bank of New York.

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Seriously delinquent auto loans whose payments were 90 days or more past due jumped to $8.24 billion in the fourth quarter, which was just an extension of the third quarter of last year, when the previous high was set, according to the survey.

Last month, Ford Motor Credit Co. finance arm said it expected an uptick in loan losses from historically low levels following a rise in delinquencies and car repossessions.

(Daimler invests millions in financing app. Click Here for the story.)

“Credit losses have been at historically low levels for quite some time, and we continue to see credit losses increase toward more normal levels,” the lender said in a presentation of its fourth-quarter results and 2017 outlook.

The increase in late loan payments coincided with drivers loading up on debt to buy the latest car, truck and SUV models, fueling expectations for record auto sales in 2017 — and perhaps a further increase in delinquencies.

About $142 billion in car loans were written during the fourth quarter of 2016, giving 2016 the most auto loan originations in the 18-year history of the data, the New York Fed said.

(Click Here for more about auto sales.)

Overall, auto debt hit $1.16 trillion, with a $93 billion rise over the previous year.

The increase in car loans was part of a broader growth in household debt in the fourth quarter which almost hit an all-time high in the fourth quarter, reaching $12.58 trillion, according to the survey.

Total debt was up $460 billion from a year ago and was just 0.8 percent below an all-time peak of $12.68 trillion in the third quarter of 2008, before the worst of the financial crisis and deep recession, the data showed.

(Leasing levels surge, raise concern. Click Here to see why.)

Some 4.8% of all debt was in some stage of delinquency and consumer confidence is continuing to rise along with the stock market.

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4 Responses to “Delinquent Car Loans Reach All-Time Highs”

  1. Dave says:

    Hey Bubba, maybe your $75,000 Super Duty wasn’t such a good idea.

  2. preferred user says:

    “Car loans delinquent by 30 days or more grew to $23.27 billion, the most since $23.46 billion in the third quarter of 2008.”

    No surprise nobody learned anything since 2008 ,not the congress debt spending , lenders ,not Freddie Mae ,Not Freddie Mac ,not the FED ,not government guaranteed student lenders and students while we wait for that to blow up and not the sub prime auto and home buyers.

  3. JAE says:

    Will people ever learn from the past?

    The phrase is “Cash and Carry”, not “Credit and Forget It”.

  4. Millile Wilson says:

    It is truly sad, but when you look around it has become a credit world.