Auto loan balances hit a record high at the end of 2013, according to new data from Experian Automotive. The agency’s market intelligence reported $798.5 billion in outstanding auto loans in the fourth quarter of 2013, an 11% increase from the year before and the highest level since Experian Automotive began releasing the data in 2007.
Car sales have repeatedly been cited as a leader of economic recovery as the U.S. moves on from the Great Recession, and Experian’s data reinforces that notion. Lenders have been increasingly willing to extend auto financing to consumers with lower credit scores, because current borrowers have done a good job making payments on time.
Last quarter, accounts that were 30 days past due declined 3.5% from the previous year, making up 2.63% of outstanding auto loans. (The percentage of loan dollars that were delinquent rose slightly, from 2.22% in quarter four 2012 to 2.26% in 2013.) The 60-days-past-due delinquency rate remained flat year over year.
Market Continues to Show Strength
“The automotive finance market continues to move along at a very healthy pace, and we are pleasantly surprised by the continued drop in delinquencies,” said Melinda Zabritski, senior director of automotive finance for Experian Automotive, in a news release about the data. “The record level of open loan balances combined with the reduction in late payments shows that consumers who have purchased a vehicle are not only reliant on financing, but also firmly committed to making their payments on time.”
Not only do the low delinquency rates encourage lenders to extend credit to consumers they consider higher-risk, the extended growth in the auto-lending market has saturated higher credit tiers, leaving lenders few options besides reaching out to nonprime, subprime and deep subprime customers. Last quarter, those credit segments made up a larger portion of outstanding loans, increasing from 35.7% of car loans in the fourth quarter 2012 to 36.2% in 2013.
Before you get an auto loan, it’s important to check your credit so you know where you stand. You can get two of your credit scores for free, plus a look at the most important factors affecting your credit scores, with the Credit Report Card. If you want to view your full credit report, you can get free copies every year from each of the major credit reporting agencies.
More on Auto Loans:
- Are There Car Loans for People With Bad Credit?
- What to Do If You Can’t Make Your Car Payments
- Top 5 Worst Car Buying Mistakes