On the road with rising auto loan delinquencies

Delinquencies in the auto loan landscape are the highest they’ve been in the past decade. According to the New York Fed’s recent blog post, 2018 was marked by historically high levels of newly originated loans in the auto industry, with $584 billion in new auto loans and leases showing up on credit reports. At the end of 2018, more than 7 million American borrowers were behind on their auto loans by 90 days or more.

Fortunately, these numbers have largely been driven by a strong overall economy, which has seen an increase in car sales since the end of the financial crisis. The rise in auto loan delinquencies has been less dramatic than the increased number of new sales in the same industry. The latest quarterly report on household debt and credit suggests that car loans have been keeping pace with the overall growth in vehicle sales in the past five years.

However, this growth in auto loan participation has also seen more subprime auto loan borrowers than ever entering the market, and thus a larger group of borrowers at high risk of delinquency.

 

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