• News
  • Guides
  • Reviews
  • Media
  • About
  • News
  • Guides
  • Reviews
  • Media
  • About
Sign up Now (For Free)

Sign up for our newsletter and receive the latest automotive news in your inbox!

Invalid email address
We promise not to spam you. You can unsubscribe at any time.
Thanks for subscribing!
News
Read Now
  • All News
  • Automakers
  • Automobiles
  • Auto Shows
  • Business
  • EVs & Environment
  • Guides
  • Lawsuits/Legal
  • Regulatory
  • Ride-Sharing
  • Safety & Recalls
  • Technology
Recent
  • The Rearview Mirror: Triumph of the Bean Counters
  • VW Teases U.S. Version of ID.Buzz — and Here’s What We Know About the Electric Microbus
  • Make Sure You're Good to Go for the Holiday Weekend
  • Hyundai, LGES Building $4.3B EV Battery Plant in U.S.
  • New Vehicle Sales Set to Rise, Used Vehicle Sales Expected to Drop in May
  • Ford Teaming with Tesla to Make Charging Even Easier
  • Q&A: VinFast CEO Van Anh Nguyen Talks Tough Reviews, Tough Learning Curve, Bright Future
  • Stellantis Invests in new Lithium-Sulfur EV Battery Tech
  • The Safest Cars For Your Teenage Driver
  • Honda Teams with Aston Martin in Formula One Return
Editor’s Choice
    Reviews
    Read Now
    • All Reviews
      • Feeder
    • Classic Cars
    • Concept Cars
    • Convertibles
    • Coupes
    • Crossovers/CUVs
    • Diesel
    • Hot hatches
    • Hybrids
    • Luxury Vehicles
    • Minivans
    • Muscle Cars
    • Pickups
    • Sedans
    • Sports Cars
    • Super Cars
    • SUVs
    Recent Reviews
    • A Week With: 2023 Electrified GV70 AWD Prestige
    • A Week With: 2023 BMW XM
    • A Week With: 2023 Mercedes-Benz GLS 580 4Matic
    • First Drive: 2024 Audi Q8 e-Tron Prestige
    • First Drive: 2024 Volvo C40 Recharge Single Motor
    • A Week With: 2023 Ford Bronco Everglades Edition
    • First Drive: 2024 Kia Seltos
    • A Week With: 2023 Volvo V60 Cross Country B5 AWD
    • 2023 Kia Sportage PHEV X-Line Prestige AWD
    • First Drive: 2023 VinFast VF 8 City Edition
    Editor’s Choice
      Guides
      Car Warranty
      • Endurance Warranty Reviews
      • BMW Extended Warranty
      • Extended Warranty For Cars Over 100k Miles
      • Extended Car Warranty Cost
      • Subaru Extended Warranty
      • CarShield Reviews
      • CarShield Cost
      • Aftermarket Car Warranty
      • CARCHEX Warranty Reviews
      • Reputable Extended Car Warranty Companies
      • Used Car Warranty Companies
      • Best Car Warranty
      • Is CarShield A Scam?
      • Mercedes Extended Warranty
      • CarShield Plans
      Insurance
      • How To Identify A Car Insurance Company
      • Geico Mechanical Breakdown Insurance
      • How Far Back Does A Car Insurance Company Look
      • Mechanical Breakdown Insurance For Used Cars
      • State Farm Mechanical Breakdown Insurance
      • Mechanical Breakdown Insurance From Progressive
      • Dollar A Day Insurance
      • Auto Insurance For SSI Recipients
      • Car Insurance Rates After A Suspended License
      • Auto Insurance For Salvage Vehicles
      • Average Cost of Dodge Ram 1500 Car Insurance
      • Car Insurance Florida
      • Full Coverage Auto Insurance
      • GrubHub Insurance
      • Amazon Delivery Auto Insurance
      Shipping
      • Car Shipping Companies
      • uShip Reviews
      • Auto Shipping From California To Hawaii
      • Montway Auto Transport Reviews
      • Cheap Car Shipping
      • Easy Auto Ship Reviews
      • Auto Shipping Miami
      • Auto Shipping To Alaska
      • Car Shipping Cost
      • Auto Shipping Hawaii
      • Auto Shipping Puerto Rico
      • Sherpa Auto Transport Reviews
      • Auto Shipping Atlanta
      • Auto Shipping Boston
      • Auto Shipping. Chicago
      About
      • About Us
      • Contact Us
      • Terms of Use
      • Privacy Policy
      • Affiliate Disclosure
      • Sitemap
      TheDetroitBureau.com

      More than just “another” place to find news, reviews, spy shots, commentary, features, and guides about the auto industry. TheDetroitBureau doesn’t stop with the press releases or confuse a few lines of opinion with insightful, in-depth reporting.

      Contact Us

      Like what you see? Have some ideas for making The Detroit Bureau.com even better? Let us know, we’d love to hear your voice.

        Media
        Listen Now
        • Headlight News: All Episodes
        More from TheDetroitBureau
        • Guides
        • Latest News
        • Auto Reviews
        • Podcasts
        Headlight News

        TheDetroitBureau.com’s Headlight News offers a look at the past week’s top automotive news stories, as well as what’s coming up in the week ahead. Check out the week’s top story and our latest review…along with a dive into the past with this week in automotive history.

        home > news > Automakers > Despite Higher Prices, Auto Loan Delinquencies Remain Low

        Despite Higher Prices, Auto Loan Delinquencies Remain Low

        But with inflation surging, could it lead to a rise in the moths ahead?

        Larry Printz
        Larry Printz , Assistant Managing Editor
        Dec. 15, 2021
        Los Angeles gas prices on 11-21-21
        Rising gas prices have buyers swapping larger SUVs for smaller ones.

        Despite rising prices of new and used cars, the dramatic increase in the size of the average car loan, and industry concerns about affordability, loan delinquencies remain low, according to credit rating agency Experian.

        But with gas prices having climbed 50% during the past year, and with drivers paying an average of $3.32 a gallon for regular, SUV owners are looking for ways to downsize into a smaller, more fuel-efficient vehicle, according to SwapALease.com.

        According to the site, drivers of leased vehicles are using online services to match them with someone who’s not affected by rising fuel prices and willing to assume the remaining contract.

        That’s the picture painted of the current financial state of automotive buyers. 

        Of the two, rising MSRPs are the bigger concern

        The rising prices for new and used cars have led to ever larger auto loans.

        Fuel prices are at their highest prices in nearly a decade, which is clearly impacting budgets as the price of all goods and services are rising. But the availability of gas-electric hybrids can minimize the impact of fluctuating fuel prices, particularly when they’re at their peak. 

        Of the two, the bigger concern comes from the rising price of vehicles.

        According to Experian, the average new vehicle loan amount increased 8.5% year-over-year to $37,280 in the third quarter of 2021, up from $34,682 in 2020. Average used vehicle loan amounts increased more than 20% year-over-year — jumping to $25,909 in the third quarter 2021, from $21,622 in 2020. 

        This translates into bigger average monthly payment grew as well. For new vehicles, that averaged $609 in 2021, up from $565 in 2020, and $465 for used vehicle loans, up from $401 in 2020.

        But don’t blame interest rates for the higher payments. Year-over-year, the average interest rate for a new vehicle loan decreased to 4.05%, from 4.23% in 2020. Similarly, used vehicle rates dropped to 7.98% from 8.39% the previous year.

        Where’s the strain?

        So far, consumers appear to be able to handle larger car loan payments.

        With such dramatic price increases, it might be expected for delinquencies to rise along with larger payments, but that’s not the case. 

        According to Experian, 30- and 60-day delinquencies are low. Thirty-day delinquencies saw a slight 0.01% increase to 1.66% from 1.65% in 2020. while 60-day delinquencies remained flat at 0.55% year-over-year. Remarkably, both rates are lower than 30-day 2.35% rate and 60-day 0.79% rate seen in the third quarter of pre-Pandemic 2019.

        “Vehicle prices have been on the rise for some time, so it’s a positive sign to see delinquencies remain so stable. Consumers are demonstrating their ability to manage these larger loans and higher monthly payments,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions.

        But she doesn’t think we’re out of the woods just yet.

        “With the sizable increases that we’ve seen in loan amounts this quarter, delinquencies will be an important metric to monitor in the quarters to come.”

        What’s driving the price increases

        Dealers are charging at or above sticker price for most new cars.

        In September 2021, the average new car cost $45,031, up $4,872, or 12.1% from the previous year according to Cox Automotive. The large price increases are being driven by strong demand for luxury cars, pickups and midsize SUVs, which may explain why delinquencies aren’t rising dramatically despite escalating sticker prices. These consumers are more financially able to handle higher prices. 

        But all car buyers are facing higher prices. According to J.D. Power, 87% of new cars sold during the past two months sold at sticker price or more, in some cases, $10,000 or more above sticker price.

        The higher prices are a result of the Pandemic, which drove a surge in demand for personal transportation as vehicle production was pared back. Inventories have continued to decline due to semiconductor shortages and supply constraints. Given the scarcity, OEMs are placing their chips in higher end products with larger profit margins. Look for more of the same until semiconductor supplies return to their normal levels. 

        How to Care for Your Car

        Cheap Car Warranty

        Editor's Choice

        Best Extended Car Warranty

        Editor's Choice
        Recently Published

        The Rearview Mirror: Triumph of the Bean Counters

        Yesterday
        VW tease for ID Buzz three row

        VW Teases U.S. Version of ID.Buzz — and Here’s What We Know About the Electric Microbus

        May 26, 2023
        Hyundai and LGES handshake for GA battery plant REL

        Hyundai, LGES Building $4.3B EV Battery Plant in U.S.

        May 26, 2023

        Leave a Reply Cancel reply

        Your email address will not be published. Required fields are marked *

        Share this article:
        © The Detroit Bureau 2023
        • Guides
        • Privacy Policy
        • Terms of Use
        • Affiliate Disclosure
        • Contact Us
        • Sitemap
        Follow Us: