|Bigger car loans, but most still paying on time||| Print ||
|Written by ALEX VEIGA, AP Business Writer|
|Tuesday, 20 August 2013 10:02|
LOS ANGELES (AP) — Many Americans are carrying higher auto loan balances, but the increased financial strain isn't resulting in more missed payments, new data shows.
Average auto loan balances have increased amid a strong market for cars and trucks this year, rising to $13,435 in the second quarter. That's up 4.5 percent year-over-year and a 1.3 percent increase from the first quarter. Many drivers have moved to replace older vehicles after holding back on purchases for several years following the last recession. Low interest rates and good lease terms have also helped fuel U.S. auto sales, which jumped 14 percent to 1.3 million in July.
As more drivers have gone car shopping, lenders have responded, making loans available to more borrowers, even those with less-than-perfect credit. The new loans, which tend to have higher balances early on, are pushing up the average balance.
But Americans are keeping up with the payments. The rate of U.S. auto-loan payments late by 60 days or more was essentially flat in the April-June quarter, inching to 0.80 percent from 0.79 percent in the second quarter of last year, credit reporting agency TransUnion said Tuesday. The delinquency rate dropped from 0.88 percent in the first three months of the year.
"It's encouraging to see consumers take on more auto debt while delinquencies remain low," said Peter Turek, TransUnion's vice president of automotive. "Consumers clearly are more confident in managing additional debt."
The late-payment rate among subprime borrowers, or those whom lenders deem a higher credit risk because of their track record of managing debt, did edge higher in the second quarter. It rose to 5.02 percent from 4.94 percent a year earlier.
Those borrowers also were carrying balances that were, on average, more than 7 percent higher than in the same quarter last year, TransUnion said. Subprime borrowers accounted for 14.9 percent of all auto loans in the second quarter, unchanged from the same time in 2012.
All told, auto-loan volume grew about 4 percent in the second quarter versus the same period last year.
Copyright 2013 The Associated Press.