One forecaster expects what it terms modest automotive loan growth this year, though it acknowledges that could be compromised as the industry faces challenges from multiple directions.

The TransUnion forecast expects about 3% growth in auto loan originations due to a similar expected increase in new light-vehicle sales this year.

The credit-reporting agency also observed consumer credit stabilization over the last two quarters of 2024, as originations grew year-over-year in automotive and other consumer lending segments. It also noted balance increases more in keeping with prepandemic rates.

“In Q4 2024, we saw several signals inching towards a return to more typical patterns within the consumer credit market,” said Vice President and Head of Research Michele Raneri in a press release on the forecast. “We will be looking for additional signs of improved performance in these markets moving forward.”

TransUnion checks the forecast, though, by pointing out that the auto industry faces federal policy shifts, in addition to continued high interest rates, inflation above 2%, and still-limited used-vehicle inventory.

It said loan delinquencies increased in both the automotive and mortgage segments in the fourth quarter.

LEARN MORE: Under-Water Auto Loans on the Rise