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Auto Loan Delinquencies on the Rise

Leasing, longer-term loans on the rise in U.S.

by on Feb.26, 2016

Fitch Ratings is warning that the subprime delinquency rate is on the rise.

Even with sales booming, the auto industry got another warning about easy credit as Fitch Ratings reported that delinquencies on U.S. subprime auto-related asset backed securities have reached a level not seen since the 2008-2009 recession.

The underperforming loans, which have been bundled into securities sold to investors, come from recent vintages driving the increase, according to Fitch. A recent report from Experian also noted rising level of delinquencies in car loans.

Picking up on the Trends!

Earlier this week, analysts from J.D. Power & Associates, while predicting strong sales for February, noted consumers are opting for leasing and long-term loans at record levels. So far in February, leases and loans of 72 months or longer combined to represent 65.1% of all retail sales, a record level for any month. The previous record was set in January 2016 at 64.3%, according to John Humphrey, J.D. Power & Associates top analysts. (more…)