Auto Loan Delinquency at Lowest Levels Ever

The percentage of car financers who are 60 days or more late on their loan repayments has fallen to its lowest recorded level, according to The Los Angeles Times. The data was provided by TransUnion, which, admittedly, has been collecting data for only a relatively short amount of time (since 1999).

Auto loan delinquencies made up 0.33% of all outstanding automotive loans during the second quarter of this year. That rate is about 25% lower compared with a year ago, the newspaper reported.

Auto loans have risen year to date, TransUnion says. More than 8.4 million new auto loans have been issued so far this year, up 14% compared with the first seven months of last year. The credit agency says the increase in loans mainly comes from the easing of credit restrictions, helping more subprime buyers get auto loans. 

Nearly 89% of car shoppers borrow money or lease their vehicles instead of paying with cash, according to CNW Marketing Research. When money dried up during the Great Recession, many people were left without a way to buy a car. The easing of credit is a main contributor to the surge in auto sales; about 8.5 million new vehicles have been sold year to date since July, up 14% over last year.

Related
Auto loan delinquencies fall to lowest rate on record (LA Times)
Why 2012 Could Be the Year of the U.S. Auto Industry
More Automotive Industry News

Comments

These new auto loan delinquency figures are pretty interesting.
In addition to mellowed lending regulations, do you think borrowers are also prioritizing their car payments over other bills? People need their cars to get to work and pick up kids from school, while it may feel hopeless to continue timely payments on something like an underwater mortgage.
To see auto loan delinquency rates continue to drop, borrowers must remember a few things: the ratio of how much cash they’ll put into their car monthly (gas and maintenance included) versus what they make in a month. It’s simple math that’s easily forgotten. Without this careful budgeting prior to going to the dealership, it’s all too easy to get consumed by add-ons and upgrades.

It's encouraging that the rates of delinquency are falling. That means that more people can fit their car payments into their budget and do not have to cut those in favor of other bills.

J. Beissel put forward a valid suggestion as well, although I hope it is not the case that people are feeling hopeless about other loans.

Since the overall number of loans has risen, the drop in delinquency is not due to a decrease in the number of people who had these loans to begin with.

Well it's a good thing a lot of people can have their car payments and no need to worry about their bills a lot because this is very convenient.