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Outstanding Auto Loan Balances Reach Record High; River Town FCU Loan Manager Says it Makes Sense Because Cars Cost More Today
Wednesday, August 27, 2014 6:40 AM

According to Experian Automotive, outstanding automotive loan balances reached an all-time high in the second quarter of 2014. According to its latest State of the Automotive Finance Market report, the total dollar amount of automotive loan balances outstanding hit $839.1 billion, up 11.7 percent from the previous year. Tim Bowers, loan manager with River Town FCU, tells the Leaguer it makes sense that auto loan balances would be higher because the cost of cars is going up.

“People today can spend anywhere between $30,000 and $50,000 for a new car. Ten years ago you might have paid half that,” Bowers says. “And the majority of our borrowers are financing 100 percent.”

Further findings from the Experian report showed that, while still at near historic lows, 60-day loan delinquencies increased by 7 percent to 0.62 percent in Q2 2014 from 0.58 percent the previous year. Additionally, 30-day delinquencies showed a slight increase, going from 2.38 percent to 2.39 percent over the same time period. Moreover, the total balance of loans that are 60-days delinquent has increased by $859 million since Q2 2013, while the balance of 30-day delinquent loans has increased by $2.8 billion from a year earlier.

Bowers says they have seen a slight uptick in delinquencies, but nothing too concerning.

“We’ve seen some members fall behind on their auto loan, but most end up paying before it before it gets beyond 30-days late,” he notes.

“We have a low delinquency rate and most of our borrowers who fall behind on their loan

Other findings from the Experian report include:

  • The overall automotive repossession rate saw a significant increase in the second quarter of 2014, jumping more than 70 percent to 0.62 percent from a year earlier.
  • Finance companies were the only lender type to see a year-over-year increase in repossession rates, rising from 1.13 percent in Q2 2013 to 2.75 percent in Q2 2014.
  • All lender types experienced growth in year-over-year quarterly loan volume, with banks up by $31 billion, credit unions up by $25 billion, finance companies up by $24 billion and captive finance companies up by $9 billion.
  • The average charge-off amount in Q2 2014 was $8,149, up $932 from the previous year.