The outlook for auto finance growth is encouraging, the latest TransUnion report on auto loan volume and delinquencies shows.
“We’ve seen credit availability play a big role with the increase in car sales, and credit availability is still good,” Peter Turek, TransUnion’s vice president of automotive, said Wednesday in a phone interview discussing the report. .
The combination of higher loan volumes and low delinquencies builds confidence in the auto finance market, he said.
“Dealers have confidence lenders are going to be around. Lenders have confidence dealers are not putting consumers in vehicles they can’t handle when they hit a rough patch,” Turek said.
Completing the picture, he said, consumers have enough confidence to take on more debt.
In both the prime and subprime categories, buyers are borrowing in greater numbers as auto sales increase, and, on average, they are borrowing bigger amounts per loan, TransUnion said.
In the second quarter this year, the average debt per loan was $13,435, up about 4 percent from $12,875 in the 2012 period.
Despite the increase, buyers with prime and subprime credit are managing to make payments on time at almost exactly the same rate as a year ago, Turek said.
Among all borrowers, only 0.80 percent of auto loans were 60 or more days delinquent in the second quarter of 2013. That was a slight increase from 0.79 percent a year earlier, TransUnion said.
Loans that are delinquent 60 or more days are the most likely to be written off as bad loans.
For buyers with subprime credit, the 60-day delinquency level was 5.02 percent, only a small increase from 4.94 percent a year earlier.
“It’s encouraging to see consumers take on more auto debt while delinquencies remain low,” Turek said. “Consumers clearly are more confident in managing additional debt.”
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