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Auto Loan Delinquencies on the Rise

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    Auto Loan Delinquencies on the Rise

    https://www.cnbc.com/2019/02/27/auto...it-record.html


    A growing number of borrowers with auto loans are failing to make their monthly payments, according to a new report from Experian.

    The credit reporting firm, which tracks millions of auto loans, said the percentage of auto loans delinquent for more than 60 days inched up in the fourth quarter to 0.78 percent from 0.76 percent the year before.

    "The percentage of delinquencies has trended upward within the last few years," said Melinda Zabritski, senior director of automotive financial solutions for Experian. "But it is worth noting, the percentages are still well below the high-water mark set in 2009."

    While the delinquency rate is well below the historical average, economists say the uptick adds to concerns Americans may be showing signs of struggling financially. Earlier this month, a report by the Federal Reserve Bank of New York found more than 7 million borrowers were at least three months behind on their auto loans at the end of last year — more troubled borrowers than at the end of 2010 when overall delinquency rates were at their worst. The delinquency rates are lower now because the market for auto loanshas since grown.

    Zabritski says the data is worth watching, but not yet to the point of serious concern. "It's only natural to see an uptick in automotive delinquent loan volume. It's important to view these trends within the larger industry context," she said.

    Americans are borrowing more money than ever to buy new vehicles, $1.17 billion in the fourth quarter according to Experian. That's not surprising given that consumers are buying more pickups and SUVs, which carry a higher sticker price than sedans.

    The automotive web site Edmunds says the average transaction price for a new vehicle, what consumers actually paid dealers, in December hit an all-time high of $37,260, an increase of $6,598 compared with the same time in 2010. As a result of the higher prices, the average new vehicle auto loan in the fourth quarter climbed more than $600 to $31,722, according to Experian.

    Not only are consumers borrowing more to pay for a new car or truck, they are also making higher monthly loan payments. Experian says the average monthly payment for a new vehicle hit a record high of $545, up $30 compared to a year ago. That increase is driving up interest in used vehicles that sell at a far lower price and typically carry a lower monthly payment.

    Experian says the average used vehicle loan in the fourth quarter topped $20,000 for the first time ever, with the average used car having a monthly loan payment of $387.
    Brian

    #2
    I'm not surprised at all. I posted a thread recently about how consumer debt is at an all time high so it was just a matter of time until delinquencies started creeping up.

    I've been very casually looking at homes in central Florida and I'm surprised by how many foreclosures there are. I didn't realize that was still an issue but it sure seems to be.

    The new car prices baffle me too. I'd love to see a correlation between new car purchase price and income. I earn over 200K and I would never ever spend 37K on a car. My current car was 16K. I think we paid 21K for my wife's. I've kind of resigned myself to the fact that my next car will probably be in the 20-25K range.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #3
      Originally posted by disneysteve View Post
      I'm not surprised at all. I posted a thread recently about how consumer debt is at an all time high so it was just a matter of time until delinquencies started creeping up.

      I've been very casually looking at homes in central Florida and I'm surprised by how many foreclosures there are. I didn't realize that was still an issue but it sure seems to be.

      The new car prices baffle me too. I'd love to see a correlation between new car purchase price and income. I earn over 200K and I would never ever spend 37K on a car. My current car was 16K. I think we paid 21K for my wife's. I've kind of resigned myself to the fact that my next car will probably be in the 20-25K range.
      Around 30 percent of all cars are leased these days, so the actual price of the car isn't on the radar of many consumers. How much is the payment and for how long?
      How can you have any pudding if you don't eat your meat?

      Comment


        #4
        Originally posted by TexasHusker View Post

        Around 30 percent of all cars are leased these days, so the actual price of the car isn't on the radar of many consumers. How much is the payment and for how long?
        That's a good point, and actually the more expensive the car, the higher the lease rate. Luxury cars have lease rates of 50% or more.

        So when they report average monthly payments, are they lumping together loans and leases? Either way, people are probably spending too much on average relative to their income.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


          #5
          Originally posted by disneysteve View Post

          That's a good point, and actually the more expensive the car, the higher the lease rate. Luxury cars have lease rates of 50% or more.

          So when they report average monthly payments, are they lumping together loans and leases? Either way, people are probably spending too much on average relative to their income.
          I know on the high end cars, Mercedes, Rover, BMW, etc - the vast majority are leased. We lease our Rover. It’s expensive but there are benefits too. I wouldn’t advise it, but for us I like it.

          How can you have any pudding if you don't eat your meat?

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