Bigger car loans, but most still paying on time

LOS ANGELES — Many Americans are carrying higher auto loan balances, but the increased financial strain isn’t resulting in more missed payments, new data shows.

Average auto loan balances have increased amid a strong market for cars and trucks this year, rising to $13,435 in the second quarter. That’s up 4.5 percent year-over-year and a 1.3 percent increase from the first quarter. Many drivers have moved to replace older vehicles after holding back on purchases for several years following the last recession. Low interest rates and good lease terms have also helped fuel U.S. auto sales, which jumped 14 percent to 1.3 million in July.

As more drivers have gone car shopping, lenders have responded, making loans available to more borrowers, even those with less-than-perfect credit. The new loans, which tend to have higher balances early on, are pushing up the average balance.

But Americans are keeping up with the payments. The rate of U.S. auto-loan payments late by 60 days or more was essentially flat in the April-June quarter, inching to 0.80 percent from 0.79 percent in the second quarter of last year, credit reporting agency TransUnion said Tuesday. The delinquency rate dropped from 0.88 percent in the first three months of the year.

“It’s encouraging to see consumers take on more auto debt while delinquencies remain low,” said Peter Turek, TransUnion’s vice president of automotive. “Consumers clearly are more confident in managing additional debt.”

The late-payment rate among subprime borrowers, or those whom lenders deem a higher credit risk because of their track record of managing debt, did edge higher in the second quarter. It rose to 5.02 percent from 4.94 percent a year earlier.

Those borrowers also were carrying balances that were, on average, more than 7 percent higher than in the same quarter last year, TransUnion said. Subprime borrowers accounted for 14.9 percent of all auto loans in the second quarter, unchanged from the same time in 2012.

All told, auto-loan volume grew about 4 percent in the second quarter versus the same period last year.

More in Herald Business Journal

Happy accident leads Edmonds couple to make Hunniwater drink

The latest line of energy drinks by Karin and Eric… Continue reading

Single payer is no panacea for our costly health care system

We must address the cost of health care before designing an insurance system.

Voters are on the sidelines as the port fills a vacant seat

Troy McClelland resigned from the Port of Everett commission too late for an election before 2019.

Career Fair planned next week at Tulalip Resort Casino

The Snohomish County Career Fair is planned from 10 a.m. to 2… Continue reading

American Farmland Trust president to speak in Mount Vernon

American Farmland Trust President John Piotti plans to give a talk about… Continue reading

In new setback, Uber to lose license to work in London

The company, beset by litany of scandals, was told it was not “fit and proper” to keep operating there.

Not home? Walmart wants to walk in and stock your fridge

The retailer is trying out the service with tech-savvy shoppers who have internet-connected locks.

Trade panel: Cheap imports hurt US solar industry

The ruling raises the possibility of tariffs that could double the price of solar panels.

Agent joins Re/Max in Smokey Point

Dennis Roland joined the Re/Max Elite Smokey Point office. The Navy veteran… Continue reading

Most Read