Auto loan balances in the U.S. hit $968-billion in the third quarter of 2015 — a 53 per cent growth since postrecession low in 2010, reported Experian Automotive.
That marks a $98-billion increase from the previous year, Experian said in its recent State of the Automotive Finance Market report.
The global information services company said despite the high total amount of outstanding loans, delinquencies are dropping. In the third quarter, 30 day delinquencies dropped to 2.5 per cent from 2.7 per cent the year prior. There was also a slight drop in 60 day delinquencies that same quarter, from 0.74 per cent in 2014 to 0.73 per cent.
Experian also found the largest increase in volume of open loans was in the super prime category, which rose 8.3 per cent from the previous year. It was followed closely by subprime, which increased 7.8 per cent, and nonprime reached 7.7 per cent.
The distribution of open loans by risk segment remains relatively unchanged, said Experian. This shows that auto finance is being driven by consumers across the board, and not just a particular segment of the market.
“Continued growth in the automotive finance market is a clear sign of improved consumer confidence over the past few years,” said Melinda Zabritski, senior director of automotive finance for Experian, in a written release.
“Since bottoming out in the recession, automotive sales have rebounded steadily, which is a good sign for consumers, automotive manufacturers, lending organizations and the overall economy. What’s critical to this success is that consumers stay on top of their payments. If they can continue to manage their financial obligations and make timely payments, the automotive industry can continue to flourish and grow for quite some time,” Zabritski added.
