Q2 Auto Loan Debt Hits Record $1.3 Trillion
Aug 21st, 2019 @ 2:39 PM by Amber Nelson
Americans now owe $1.3 trillion in auto loan debt, according to data from the Federal Reserve, a record high and a 4.8% increase from one year ago.
The Fed’s Quarterly Report on Household Debt and Credit found that during the 2019 second quarter, new auto loans and leases increased by 2.9% for a total of $155.6 billion.
These new loans were made to consumers will all types of credit scores. The percentage of borrowers with excellent credit (scores between 720 and 759) increased 5.6% from the year before while the share of those with subprime credit (scores under 620) rose just 1.6%. Subprime auto loans made up 23.5% of the total and they accounted for 18.8% of all new car loan debt.
Average car loan amounts are on the rise as well. In March 2019, the average origination auto loan total was $23,182, a 3.1% jump from March 2018.
During the second quarter, auto delinquencies of 90 days or more rose to 4.6% of total balances, up from 4.2% a year earlier. That’s the highest rate since the Great Recession, when serious delinquencies hit a peak of 5.4% in the 2010 fourth quarter.
And even though interest rates rose slightly to an average of 5.8% for prime borrowers, the growth in auto sales and prices has been aided by the previous three straight months of interest rate decreases.
A separate study from HowMuch found that America’s auto debt is more concentrated in the South and West. Texans have the highest average remaining auto loan debt balances at $6,700. Louisiana, Georgia and Florida were also in the top five. Among the states with the lowest car loan balances were several Northeastern states and the District of Columbia. D.C. residents only carry an average car debt burden of $3,000.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.