Severe Delinquencies Fall to 10-Year Low, Equifax Reports
ATLANTA — According Equifax’s latest National Consumer Credit Trends Report, new auto loan originations have reached record highs, while severe delinquency rates fell to their lowest level in nearly a decade, reports F&I and Showroom. At the same time, auto leasing has surged as consumer demand for new vehicles remains strong.
The severe delinquency rate — the percentage of outstanding loans 60 or more days past due — for auto loans and leases in April 2015 was 0.81%, the lowest level since September 2005. This uptick in performance coincides with continued growth in the auto loan market, with the number of new auto loan originations through February reaching 4.1 million — a 5.2% increase over the same period last year. It’s also the highest origination total since Equifax began tracking this data in 2005.
“There’s been much concern about the growth of auto lending, particularly in the subprime space, over the past year, yet historically low delinquency rates reveal that the sector continues to perform well,” said Dennis Carlson, Deputy Chief Economist at Equifax. “More consumers are staying current on their payments, which is due to both improved economic conditions and the fact that lenders and dealers are qualifying the right borrowers across the entire credit spectrum.”
Other highlights from Equifax’s report include:
More than 980,000 auto loans have been originated year to date to consumers with an Equifax Risk Score below 620, an 8.1% increase over 2014. These newly issued loans have a corresponding total balance of $17 billion.
The average new auto loan amount issued in February 2015 was $20,310, a 4.2% increase over February 2014.
Through February, 24.2% of newly originated auto loans were issued to consumers with a subprime credit score, a slight increase in share compared to the same period last year.
The average subprime loan amount was $17,363 in February 2015, a 4.4% increase compared to February 2014.
Total auto loans and leases outstanding as of April 2015 was more than $1 trillion, with loans comprising $934 billion and leases making up $66 billion of that total.
Auto leasing has grown for both banks and finance companies. In April 2015, bank portfolios held 973,100 auto leases and finance companies held 6.63 million leases, a 12.1% and 19.1% year-over-year growth rate, respectively, in outstanding lease accounts.
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