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TransUnion study: Q2 uptick in late auto loan payments – Automotive News

by Oct 31, 2022Blog0 comments

TransUnion found that 1.43 percent of auto loans were paid at least 60 days late in the second quarter of 2022, up from 1.07 percent in 2021 and 1.06 percent in 2019.
Second-quarter auto loan delinquency rates were up from the same period in 2021, according to a study conducted by TransUnion. But consumers continue to prioritize paying their auto loans almost as much as paying their home mortgages — and much more than making their credit card payments, the study finds.
Using data from its U.S. consumer database, TransUnion found that 1.43 percent of auto loans were paid at least 60 days late in the second quarter of this year, up from 1.07 percent in 2021 and 1.06 percent in 2019.
“The number of consumers late on their auto loans is not as simple as ‘all of a sudden, consumers started missing payments’,” Satyan Merchant, vice president and automotive business leader at TransUnion, told Automotive News. “There are several factors. One that really popped was the effects of the pandemic accommodation programs that auto lenders made available to their borrowers.”
2022: 1.43%
2021: 1.07%
2020: 1.31%
2019: 1.06%
2018: 1.05%
Source: TransUnion
The programs allowed consumers to delay monthly auto payments, but most of those offerings are now over, leaving some consumers delinquent, Merchant said. U.S. stimulus programs offered during the COVID-19 pandemic also helped consumers stay current on their payments.
“Those accommodations did help and did their job to keep consumers afloat,” Merchant said. “But that just delayed a natural delinquency that may have occurred.”
Merchant said the delinquency rate still is relatively low compared to historical standards, noting that the 1 percent rate during the pandemic is especially low.
Other factors contributing to the rise in second-quarter loan delinquencies include high vehicle prices, fewer lease vehicles returned and lower new-vehicle inventories, which reduced the amount of auto loans originated over the last two years.
“That slide wheel for the lease program is broken,” Merchant said. “Fewer people are turning in their used vehicle, [which] means fewer originations on loans, fewer cars available and fewer people in market.”
 
Merchant: Multiple factors behind rise in late payments.
The study also compared the percentage of delinquent loans from those originated in each quarter of 2019 and 2021. TransUnion said it did not use 2020 data because of the pandemic’s effect on that year’s percentages. In the first quarter of 2019, 1.49 percent of loans were delinquent within the first six months, compared with 1.07 percent in 2021. That uptick, Merchant said, is “pretty flat,” with no “alarm bell numbers” for the industry.
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