For U.S. auto lenders, new warning signs keep appearing on the horizon.
Late-payment rates on car loans rose to their highest level in four years during the fourth quarter of 2016, according to a report released Thursday by the American Bankers Association.
The fourth-quarter report, which was based a survey of 300 banks, found that 1.75% of borrowers who got their auto loans through dealers were at least 30 days late. The delinquency rate has risen in each of the last three quarters.
Among borrowers who arranged their auto financing directly from a bank, 0.94% were 30 days or more delinquent. That rate has risen for seven consecutive quarters.
On the other hand, the late-payment rates for auto loans remain well below their 15-year averages, according to the report.
“Even with recent increases, auto delinquencies have remained remarkably low for the last five years amid booming car sales,” ABA Chief Economist James Chessen said in a press release.
Still, the report adds to the evidence that risks in the auto lending sector are growing.
Data from the Federal Deposit Insurance Corp. found that the volume of car loans at banks that were at least 30 days past due rose by 17% in the fourth quarter. What’s more, used-vehicle prices in February were 8% below their level a year earlier, a trend that will result in lenders recouping less money when they sell repossessed cars.
In other loan categories, the late-payment trends during the fourth quarter were mixed, according to the ABA’s report. Delinquency rates for personal loans and home equity loans rose, while they fell for credit cards and home equity lines of credit.