Auto loan, leasing arrears below pre-COVID levels


The level of serious auto loan and rental delinquencies is down from a year ago and is back below pre-pandemic levels, according to the recent third quarter Credit Industry Insights report from the office of TransUnion credit.

“The defaults that we are measuring have returned to the stable levels we saw before the pandemic,” Satyan Merchant, senior vice president and automotive company leader at Chicago-based TransUnion, said in a telephone interview. . “It got a little better, around the same time last year.”

TransUnion says serious auto delinquencies, defined as delays of 60 days or more, accounted for 1.38% of outstanding loans and leases in the third quarter, up from 1.46% a year ago. In the third quarter of 2019, it was 1.40%, the credit bureau said.

Low default rates are a positive sign that auto lenders are keeping loans and rentals relatively affordable.

However, TransUnion also notes that the share of auto loans and rentals is declining for customers with subprime credits. TransUnion is also monitoring defaults as borrowers exit hardship programs that were widely offered last year, allowing payment delays due to COVID-related closings.

Merchant says enrollments for these programs are already down, with no negative effect on defaults, on average. Enrollments peaked at 7.2% of all auto accounts in June 2020, according to TransUnion. In September 2021, it was only 1.2%.

“That number has dropped dramatically,” Merchant said. “It has been a gradual decrease, as government assistance – which was needed, which was helpful during the pandemic – has diminished. There isn’t a great, great amount (of hardship programs) that’s going to suddenly stop at any given time. “


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