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Posts Tagged ‘auto loan delinquency’

Auto Loans Top $1 Trillion, But Delinquencies on the Rise

Rising lease rates pose another potential problem.

by on Sep.07, 2016

August marked the second consecutive quarter where auto loans topped the $1 trillion mark.

If you’re making monthly payments on a new car, truck or crossover, you’re not alone. The long, record recovery of the U.S. automotive market has resulted in an all-time high in automotive debt – and is also leading to a rise in delinquency rates.

Between April 1 and June 30, Americans were paying off $1.027 trillion in auto loans, according to Experian Automotive, with a growing share of that due on new vehicle leases. At the same time, the number of buyers who have fallen 30 to 60 days behind on payments rose during the second quarter, Experian reported.

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The rise in delinquencies, the increasing dependence upon leasing and the fact that subprime and deep-subprime loans are rising has begun to worry many observers. Nonetheless, “The sky is not falling,” said Melinda Zabritski, the financial service firm’s senior director of automotive finance.


Auto Loans Stretch into Dangerous Territory

“A formula for disaster”?

by on Jul.13, 2016

More shoppers are turning to 73-84 month loans to stretch their new car budget.

Though U.S. auto sales have slowed a bit in recent months, the American market seems all but certain to set a new record again this year, the third consecutive all-time high.

So why does that worry many industry experts? Because a growing number of car buyers are stretching their budgets with some of the longest loan terms ever offered, something one senior industry executive calls “a formula for disaster.”

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A new study by TransUnion shows that the average auto loan is now on the books for 67 months, up from just 62 months at the beginning of the decade. And the report reveals that the number of loans running anywhere from 73 to 84 months has more than doubled since 2010.


More U.S. Auto Buyers Falling Behind on Payments

But that’s “not yet a cause for concern.”

by on Feb.09, 2016

Car dealers have been seeing record numbers of shoppers - but loan delinquencies are rising, too.

More expensive loans aren’t the only reason for automakers to worry, industry analysts are warning. There are signs that more consumers are having trouble handling the loans they’ve already taken out.

With a record number of Americans buying new vehicles last year, lenders logged a record amount of debt on their books. And a growing number of those buyers are falling behind on payments, according to Experian Automotive. While 30-day delinquencies are actually down, the number of motorists two months behind on payments grew sharply.

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“Given that we’ve seen an increase in loans to subprime and deep-subprime consumers, it’s natural to see a slight uptick,” explained Melinda Zabritski, senior director of automotive finance for Experian. “Although not yet a cause for concern, the industry should keep an eye on this metric to see how it trends in the quarters to come.”


Motorists Put Priority on Car Payments Over Credit Card, Mortgage Bills

“A reversal in payment patterns.”

by on Mar.29, 2012

Consumers may be slipping on the credit card and mortgage bills but a new study finds they're trying to keep up on the car loan.

The weak economy and high unemployment have stretched the budget to the breaking point for many Americans.  Struggling to decide which bills they can pay, a new study finds a surprising number of people will go delinquent on mortgage and credit card bills before lapsing on their monthly car loans.

Traditionally, American consumers have put a high priority on paying their mortgage on time, no surprise since losing one’s home is a life-changing experience.  Credit card debt, with traditionally high interest rates, have followed close behind.  But at a time when people may need a car more than ever simply to find a job, there has been a “reversal in payment patterns,” according to TransUnion Vice President Ezra Becker.

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“With unemployment remaining high and real estate values remaining stagnant or further depreciating, consumers continued to pay their credit cards ahead of their mortgages,” said Becker, who is in charge of research and consulting at TransUnion’s financial services business unit.  “However, the importance of their auto loans appears to have trumped even the value they place on their credit cards.”


Late Auto Loan Payments Falling

Declining rate suggests motorists gaining control of finances.

by on Aug.30, 2010

Auto loan delinquency rates are falling, even as loan availability rises.

U.S. motorists seem to be getting a grip on their household budgets and are doing a better job of getting auto loan payments in on time.

The auto delinquency rate took a sharp rise in recent years, a reflection of the worsening economy – and a mirror of the increased mortgage default rate.  In turn, that led lenders such as the former GMAC, to tighten down on auto loan availability.  At one point, in the latter half of 2008, it took a nearly perfect credit score to secure a loan from a General Motors dealer.

But industry officials report that lenders are again loosening up, at least a bit, and a declining delinquency rate is one major factor.  According to TransUnion, one of the three big credit reporting agencies in the U.S., the late loan payment rate dropped to 0.53% during the second quarter of this year, down from 0.73% during the April – June period in 2009.

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As is normal, rates varied widely across the country, from a minimal 0.28% in North Dakota to 1.05% in Mississippi.  But, significantly, the delinquency rate rose in only three states, Rhode Island, Utah and Montana.