Two credit-reporting companies say that a jump in lending to borrowers with poor credit has helped lead to a growing number of Americans falling behind on their car payments.
Car buyers behind on their loans by 60 days or more rose by 8.6% in the third quarter compared with a year earlier, according to Experian. TransUnion reported an even bigger jump of nearly 13%.
While lenders have been loosening standards and lending to more subprime borrowers, delinquent loans still comprised a relatively small segment of the auto loan market.
Experian said the 60-day delinquency rate was 0.74% of all loans, up from 0.68% a year ago. TransUnion reported a 1.16% delinquency rate, up from 1.02%.
Peter Turek, automotive vice president for TransUnion, said "as long as delinquency rates remain around 1% [nationwide], we don't anticipate seeing a material change in auto lending strategies."
With car sales and car prices up this year, the average amount borrowed to purchase a vehicle hit a record high in the third quarter, Experian reported. For new cars, the average amount financed was $27,799, up 4% from a year ago. For used vehicles, the average was $18,576, up 3.8%.
While default rates were up, consumers are still doing better at paying off their car loans than their home mortgages or credit card bills.
According to the Mortgage Bankers Association, an estimated 3.2% of home loans were 60 days or more past due in the third quarter, excluding foreclosures. The Federal Reserve reports that the delinquency rate on credit cards stood at 2.21%.