30-day auto loan delinquency rate drops slightly in Q4, Experian says

Despite an uptick in serious auto loan delinquencies, the 30-day delinquency rate is improving, according to Experian.

The percentage of auto loans 30 days or more past due improved slightly in the fourth quarter, according to Experian, even as the New York Federal Reserve reported that the 90-day delinquency rate reached its highest level since March 2012.

The 30-day delinquency rate fell to 2.32 percent of the outstanding loan balance, down slightly from 2.36 percent a year earlier, Experian said Thursday in its fourth-quarter "State of the Automotive Finance Market" report.

This month, the New York Fed said the 90-day delinquency rate was 4.47 percent in the quarter, up from 4.05 percent a year earlier and the highest since 4.55 percent in the first quarter of 2012. The 90-day delinquency rate reached its peak -- 5.3 percent -- in the fourth quarter of 2010, according to the central bank. Experian does not track the 90-day delinquency rate.

But more consumers purchased and financed vehicles last year compared with 2010, Experian said. New-vehicle sales in 2018 reached 17.3 million, compared with 11.6 million in 2010, according to the Automotive News Data Center. In the fourth quarter of last year, about 85 percent of new-vehicle purchases were financed, vs. 81.4 percent in the fourth quarter of 2010.

"While delinquencies can be an indicator of automotive finance market health, it's important to examine these trends within the larger industry context," Melinda Zabritski, Experian's senior director of automotive financial solutions, said in a statement. "With more car shoppers using automotive financing options, it's natural to see an uptick in the volume of delinquent loans."

Of the 89 million active loans and leases, 2.7 million -- or about 3 percent -- were 30 or 60 days delinquent, according to Experian data.

Lenders should consider historical trends, such as subprime origination share, to make an educated lending decision, Zabritski added.

"While consumers appear to be doing their due diligence when making borrowing choices that fit their budget, lenders also play a large role," Zabritski said. "Every consumer deserves access to quality credit, and lenders should leverage all available data to offer the most comprehensive financing options to car shoppers."

As vehicle transaction prices continue to rise, consumers are stretching their budgets. The average loan amount widened to $31,722 on new vehicles in the fourth quarter, up $623 from the year earlier. On used vehicles, the average loan amount rose $488 to $20,077, Experian said.

Loan terms held relatively flat, at 68.7 months for new vehicles and 64.4 for used, but the average interest rate climbed about 1 percentage point to 6.13 on new vehicles -- a 10-year high -- and 9.59 on used vehicles, up 0.75 point.

Those levers pushed the average new-vehicle payment to $545 -- up $30 -- and the average used-vehicle payment to $387 -- up $16. The gap between new- and used-vehicle payments expanded to $158, a $14 increase.