Americans are borrowing more for their cars, and there's an uptick in those who are falling seriously behind on payments. Find out why.
Americans racked up a record amount of auto loan debt in 2015. The total outstanding car loan balance in the United States climbed to $987 billion last year.
That’s up 11.5 percent from 2014, according to a report from Experian Automotive. Lenders also increased the number of loans they approved for Americans with bad credit. Subprime and deep subprime auto loans increased from 20.3 percent of all auto loans in 2014 to 20.8 percent in 2015.
“[W]hile loan balances continue to rise and funding may be more easily attainable, it is critically important for consumers to stay on top of their monthly payments to keep the automotive market running on all cylinders,” Melinda Zabritski, senior director of automotive finance for Experian, said in a statement.
Unfortunately, as auto loan balances inched upward in 2015, so did the number of drivers who fell badly behind on their car payments. The percentage of motorists in serious delinquency (60 days or more behind) on their loans rose to 0.77 percent, compared to 0.72 percent in 2014.
Experian said finance companies held 45 percent – $3.04 billion – of all seriously delinquent loans at the end of 2015.
Meanwhile, 30-day delinquencies actually improved to 2.57 percent in 2015, from 2.62 percent the previous year.
Although 0.77 percent for serious delinquency may seem high, Experian was quick to point out that the number was still lower than the record of 0.8 percent, which occurred in the fourth quarter of 2007.
“While rates in the more severe delinquency category are up, it’s important to note that the increases are modest and relatively low from a historical perspective,” continued Zabritski. “Also, given that we’ve seen an increase in loans to subprime and deep-subprime consumers, it’s natural to see a slight uptick.”
Check out “How to Get the Best Deal on a Car Loan.”
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