U.S. Consumers Have Increased Auto Loan Debt for 3 Straight Years
May 21st, 2014 @ 7:47 PM by Amber Nelson
Americans are taking on more car debt, as they have been consistently for the past three years, according to a new report from TransUnion, an encouraging sign that the auto loan industry has recovered from the Great Recession.
The average amount of auto loan debt per borrower rose 4.1 percent in the first quarter of this year to $16,862, up from $16,191 a year earlier. It also increased compared to the $16,769 average during the 2013 fourth quarter. The average auto loan debt per borrower has jumped almost 13 percent since the trend began in the first quarter of 2011.
The total number of auto loan accounts has also made a dramatic leap, rising to 70.0 million in the 2014 first quarter from the same quarter of 2013. “The fact that there are nearly 13 million more auto loan accounts than just one year ago points to strong demand for credit and the wide availability of credit in the marketplace,” said Pete Turek, vice president of automotive in TransUnion’s financial services business unit in a press release.
Meanwhile, the delinquency rate rose slightly from the previous year but is down from the quarter before. The rate of borrowers 60 days or more behind on their auto loans rose to 1.00 percent in the first quarter, from 0.95 percent in the 2013 first quarter, but fell from the fourth quarter of last year when it hit 1.14 percent. Part of the reason for the movement in delinquency is due to an increasing share of auto loans going to subprime customers. Those with credit scores below 641 made up roughly 32 percent of all borrowers in the 2013 fourth quarter over the previous year.
Oregon, Hawaii and California posted the largest declines in their delinquency rates, while Michigan, Arkansas and Alaska experienced the biggest increases.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.