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Considering the current economy, it’s surprising so many consumers are keeping up with their car-loan payments, says Dann Adams, president of Equifax Inc.’s U.S. Consumer Information Solutions.
It could be worse in the face of a recession and high unemployment, he says.
Of 221 million consumers his firm tracks, 71% have not had a late payment in 12 months, even though the U.S. unemployment rate is 9.1% compared with 3.6% in 2000.
“You wouldn’t think that many consumers would be in that good of shape,” Adams says at a recent Consumer Bankers Assn. auto finance conference. “It’s staggering.”
Still, auto-loan delinquencies are up, with banks taking the hardest hits among lending institutions, says Melinda Zabritski, director-automotive credit for Experian Automotive.
Thirty-day delinquencies hit 2.50% in the year’s first quarter compared with like-2008, an 11.3% increase, according to Experian data tracking.
Banks saw the highest increase, 33.5%, of such delinquencies. That compares with 2% for auto makers’ captive finance firms, 17.1% for credit unions and 0.6% for finance companies.
“Banks’ delinquency rates are increasing at an alarming rate,” Zabritski tells Ward’s. “A 33.5% increase in one year definitely is not a good thing.”
