Q3 Auto Loans Reveal Stress
Data reflect growing finance activity on the extreme ends of credit risk scale
Affordability, especially in the lower risk tiers, continues to threaten business, the average monthly new-vehicle loan payment rising 3% year-over-year to $769.
Pexels/Pixabay
Third-quarter automotive lending showed continued signs of weakness in higher-risk segments and increased delinquency rates.
TransUnion data show that all consumer lending, including in auto, reflects a widening chasm between the highest-risk borrowers and the super-prime segment that’s faring economic turbulence well.
Both segments grew in the quarter, subprime by half a percentage point to 14%, mirroring prepandemic levels, while the super-prime share increased about the same amount to 41%, TransUnion reported. Super-prime share has even surpassed prepandemic levels by about 4%.
Looking at auto loans in particular, originations grew 5% year-over-year to 6.7 million. TransUnion credited the quarter’s Federal Reserve interest rate cut and stable vehicle inventory.
Super-prime and subprime auto borrowers led the quarter’s growth, the former up 8%, the latter 9%.
Affordability, especially in the higher-risk tiers, continues to threaten business, TransUnion pointed out. The average monthly new-vehicle loan payment rose 3% year-over-year to $769, the average used-vehicle payment 3% to $538.
Meanwhile, auto loan accounts in arrears grew four basis points year-over-year to about 1.5%, said TransUnion, which observed that the growth rate at least slowed. Delinquencies among 2024 loans continued to eclipse those in 2019, the last year before the pandemic, particularly in the prime and below-prime segments, “signaling continued pressure on credit performance.”
The average auto consumer loan balance was up 2% year-over-year to $24,602.
Originally posted on F&I and Showroom
More Industry
Gone to the Dogs
A Stellantis brand decided to have some fun with one of its SUVs’ design to address growing emphasis on family pets.
Read More →
OEM Poll Sees Industry Evolution
Kerrigan Advisors’ survey of automakers finds that tariffs, technology, network tightening and other factors are poised to reshape auto retail.
Read More →
Luxe N.C. Dealerships Change Hands
A collection of Italian and English brand franchises were handed off to the owner’s friend in the business and include the Carolinas’ only Ferrari retail stores.
Read More →
Exposure Drives Interest in Chinese Cars
At a recent demonstration, consumers had the chance to ride in a Chinese-branded vehicle, a firsthand experience that improved their perceptions and purchase intent.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Agent Advocate
Rob Mancuso, who comes from a long line of auto dealers, values general agents’ place in the industry and makes a case for them taking an even bigger seat at the table.
Read More →
Driving Under Distraction
Though consumers gave higher marks to new vehicles in JD Power’s most recent initial-quality poll, high-tech interference worsened, pointing to craving for simplicity.
Read More →
Affordable New Cars a Thing of the Past
More than one out of five new vehicles sell for more than $60,000, according to Edmunds. That's up 7% compared to prepandemic 2019.
Read More →
State Follows Federal Warning on Auto Ads
The Massachusetts attorney general cautioned the state’s automotive dealers to be upfront with the consuming public about their vehicle prices or risk punishment.
Read More →
Consumer Outlook on the Rise
Younger generations are feeling more positive about their financial futures and current affordability pressures than older generations, according to recent TransUnion data.
Read More →