Auto loan amounts increase, but defaults are decreasing


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According to Experian Automotive’s latest State of the Automotive Finance Market report for the third quarter, delinquencies on auto loans are low – lower than pre-COVID levels, in fact – even though the size of the average auto loan has grown sharply. over the past year. from 2021.

“It’s a positive sign to see bad debts remain so stable. Consumers are demonstrating their ability to handle these larger loans and higher monthly payments, ”said Melinda Zabritski, senior director of automotive financial solutions at Experian.

With defaults remaining stable despite larger loan amounts, it is also likely that auto lenders will continue to provide easy access to finance, especially for applicants with good credit histories.

The continued shortage of new vehicle inventory is driving higher average transaction prices, along with lower average incentives and shifts for consumers from sedans to bigger and more expensive CUVs, SUVs and vans, says Experian.

The average new vehicle loan amount financed was $ 37,280 in the third quarter, a substantial 8.5% increase from a year ago, or up 14.4% from the third quarter of 2019 The average monthly payment for a new vehicle auto loan has reached $ 609. in the third quarter versus $ 565 a year ago, or $ 553 two years ago, according to the Experian report.

The average amount of used vehicle loans funded in the third quarter was $ 25,909, up 8% from a year ago and 26% from two years ago.

In the third quarter, auto loans past due at least 30 days accounted for 1.66% of outstanding accounts, almost exactly stable from the third quarter of 2020, and down from 2.35% in the third quarter of 2019, before COVID-. 19 pandemic, says Experian. The arrears figures relate to loans of new and used vehicles combined.

It should also be noted that the share of auto loans to borrowers with subprime credits was near a record low in the third quarter, Zabritsky said in a telephone interview. The declining share of subprime loans is a long-term trend that precedes the pandemic, she said.

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