Third-quarter automotive lending showed continued signs of weakness in higher-risk segments and increased delinquency rates.

TransUnion data show that all consumer lending, including in auto, reflects a widening chasm between the highest-risk borrowers and the super-prime segment that’s faring economic turbulence well. 

Both segments grew in the quarter, subprime by half a percentage point to 14%, mirroring prepandemic levels, while the super-prime share increased about the same amount to 41%, TransUnion reported. Super-prime share has even surpassed prepandemic levels by about 4%.

Looking at auto loans in particular, originations grew 5% year-over-year to 6.7 million. TransUnion credited the quarter’s Federal Reserve interest rate cut and stable vehicle inventory. 

Super-prime and subprime auto borrowers led the quarter’s growth, the former up 8%, the latter 9%.

Affordability, especially in the higher-risk tiers, continues to threaten business, TransUnion pointed out. The average monthly new-vehicle loan payment rose 3% year-over-year to $769, the average used-vehicle payment 3% to $538. 

Meanwhile, auto loan accounts in arrears grew four basis points year-over-year to about 1.5%, said TransUnion, which observed that the growth rate at least slowed. Delinquencies among 2024 loans continued to eclipse those in 2019, the last year before the pandemic, particularly in the prime and below-prime segments, “signaling continued pressure on credit performance.”

The average auto consumer loan balance was up 2% year-over-year to $24,602.

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