Auto Loan Delinquency Rate to Stabilize This Year
Lenders auto loans offered 28 percent more in the last three months of last year compared to same period one year earlier, All major automakers posted double-digit gain in U.S. sales last month. And an increase in auto loans has generally cover delinquencies as the inflow of new loans to help bring down the overall unemployment rate. Even so, last year default rates for car loans stood at historically normal levels. Lenders are encouraged by the improvement.
The default rates for car loans with payments late by 60 days or more rose slightly to 0.59 percent in the fourth quarter, from 0.58 percent in the preceding period of three months. But that is much lower than one year earlier when the rate stood at 0.81 percent.. Even the indicator statements for the financial crisis in Illinois, Florida, Nevada and Arizona, the sharp increases in delinquency rates seen during the recession, now continuous improvement. The revival is to be expected because typically delinquency rates are highest in the last quarter and lowest in the first quarter. Auto loan delinquency was much lower than late payments on credit cards or mortgages. Auto sales pick up. This means that banks will be handing out more loans this year as car buyers regain their appetite and delinquency rates stabilize.