Experian Automotive: Delinquency Rates Rising
In the third quarter of 2014, 30- and 60-day automotive-loan delinquencies grew 3.7% and 8.6%, respectively, from the previous year. The change was due to growth in subprime loans.
SCHAUMBURG, Ill. — In the third quarter of 2014, 30- and 60-day automotive-loan delinquencies grew 3.7% and 8.6%, respectively, from the previous year. This is according to Experian Automotive’s latest State of the Automotive Finance Market report.
“While we have observed a rise in delinquencies over the past few quarters, it was to be expected due to the growth in subprime loans. We have to keep in mind that a majority of the market is still in the prime risk category,” said Melinda Zabritski, Experian’s senior director of automotive credit. “As long as consumers continue to do a good job of making their auto-loan payments on time and lenders keep a close eye on how rates fluctuate year over year, the industry should remain relatively stable.
“Understanding the shifts in payment behavior and the industry’s risk tolerance are important for the market because these insights can trigger actions that affect vehicle prices, loan terms or interest rates,” she added.
Further findings from the report showed that, at a state level, states in the South accounted for four of the top five highest delinquency rates in both the 30- and 60-day category. On the flip side, the states with the lowest delinquency rates in both categories primarily resided in the Midwest and Northwest regions.
The report also found that total balances for all open automotive loans grew to $870 billion, up from $784 billion a year ago and finance companies saw the highest percentage increase in total dollar volume, jumping 19.6% to $134 billion.
Meanwhile, super-prime loans accounted for 20.6% of total loans in the third quarter of 2014, up from 20.26% the prior year. At the opposite end of the spectrum, deep subprime grew from 3.57% to 3.84%.
Originally posted on F&I and Showroom
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