Smart Borrower Blog

Auto Loan Delinquencies Rise in 3rd Quarter

Jan 31st, 2018 @ 8:57 PM by Amber Nelson

American borrowers fell behind on their car payments in greater numbers during the 2017 third quarter, according to new data from the American Bankers Association. And yet, delinquencies in many other loan categories fell, giving mixed signals about the strength of American consumer finances.

The ABA Consumer Credit Delinquency Bulletin revealed that delinquencies rose in 5 and fell in 5 of 11 consumer loan categories during the third quarter, with one category unchanged. Borrowers did better at being making timely payments with the following loans: Home equity loans, marine loans, mobile home loans, bank card loans and non-card revolving loans. Delinquencies (loans with payments 30 days or more past due) rose in the following categories: direct auto loans, personal loans, property improvement loans, RV loans, and home equity lines of credit. The delinquency rate on indirect auto loans was unchanged.

While loans made by car dealerships and other indirect means fared well during the latest quarter, delinquencies on auto loans made directly by banks and credit unions rose 8 basis points to 1.12 percent.

The ABA did not find the increase particularly worrisome, citing that direct auto loan delinquencies are still below their 15-year average of 1.55 percent.

“We expect tax reform will improve the economy by creating more job opportunities and augmenting wage growth,” said ABA chief economist James Chessen. “That extra boost, combined with consumers’ continued financial discipline, should help keep delinquencies low in the near future.”

Chessen also noted that the overall delinquency rate on all types of loans (1.68 percent in the third quarter) is well below its 15-year average of 2.15 percent.

“Delinquencies remained remarkably low for this late in the economic cycle,” said James Chessen, ABA’s chief economist. “…The bottom line is that consumers are feeling comfortable with their finances and have a proven record of successfully meeting their financial obligations over the last several years.”

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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