Automobile lending reached its highest level ever at the end of the third quarter while showing few signs of credit weakness, the credit bureau Experian reported Wednesday.
There were $968 billion of auto loans outstanding at the end of the third quarter, up 11% from the same period a year ago, according to the annual study from Experian Automotive. Auto loans have increased 53% since reaching a post-crisis low five years ago, the company said.
Despite recent warnings that the market is overheating, credit quality has remained relatively healthy, and by some metrics improved during the third quarter, the report said. The 30-day delinquency rate for banks decreased by 6 basis points, to 2.01%, and for the market as a whole it fell 7 basis points, to 2.53%. The 60-day delinquency rate held steady at 0.59%.
Lenders have been extending the most loans to the most creditworthy borrowers, the report showed. The number of loans to "superprime" lenders, which Experian defines as borrowers with credit scores above 780, had the fastest growth rate of any credit slice, at 8.3%, followed by subprime (FICO of 501 to 600), at 7.8%.
However, the growth rates for loan balances, rather than number of loans, shows a different picture. The overall percentage of loan balances to superprime and prime (FICO 661 to 780) declined, while balances to less creditworthy borrowers increased. Overall, prime and superprime borrowers accounted for 61.37% of all balances, down from 61.99% a year ago.