Tag Archive | "National Consumer Credit Trends Report"

Severe Delinquencies Fall to 10-Year Low, Equifax Reports


ATLANTA — According Equifax’s latest National Consumer Credit Trends Report, new auto loan originations have reached record highs, while severe delinquency rates fell to their lowest level in nearly a decade, reports F&I and Showroom. At the same time, auto leasing has surged as consumer demand for new vehicles remains strong.

The severe delinquency rate — the percentage of outstanding loans 60 or more days past due — for auto loans and leases in April 2015 was 0.81%, the lowest level since September 2005. This uptick in performance coincides with continued growth in the auto loan market, with the number of new auto loan originations through February reaching 4.1 million — a 5.2% increase over the same period last year. It’s also the highest origination total since Equifax began tracking this data in 2005.

“There’s been much concern about the growth of auto lending, particularly in the subprime space, over the past year, yet historically low delinquency rates reveal that the sector continues to perform well,” said Dennis Carlson, Deputy Chief Economist at Equifax. “More consumers are staying current on their payments, which is due to both improved economic conditions and the fact that lenders and dealers are qualifying the right borrowers across the entire credit spectrum.”

Other highlights from Equifax’s report include:

  • More than 980,000 auto loans have been originated year to date to consumers with an Equifax Risk Score below 620, an 8.1% increase over 2014. These newly issued loans have a corresponding total balance of $17 billion.
  • The average new auto loan amount issued in February 2015 was $20,310, a 4.2% increase over February 2014.
  • Through February, 24.2% of newly originated auto loans were issued to consumers with a subprime credit score, a slight increase in share compared to the same period last year.
  • The average subprime loan amount was $17,363 in February 2015, a 4.4% increase compared to February 2014.
  • Total auto loans and leases outstanding as of April 2015 was more than $1 trillion, with loans comprising $934 billion and leases making up $66 billion of that total.
  • Auto leasing has grown for both banks and finance companies. In April 2015, bank portfolios held 973,100 auto leases and finance companies held 6.63 million leases, a 12.1% and 19.1% year-over-year growth rate, respectively, in outstanding lease accounts.

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No Subprime Bubble in Sight, Equifax Says


ATLANTA — While year-to-date auto loan growth rates have slowed compared to last year, totals for new credit and the number of new loans originated for auto purchases are at all-time highs, according to Equifax’s latest National Consumer Credit Trends Report.

Through June, the total number of new loans originated was 12.5 million, an increase of 4.9% from same time a year ago. The total balance of new loans was $254.2 billion, an increase of 6.9% from same time a year ago. The total also represents nearly half of total new non-mortgage credit originated.

“Auto sales continue to soar, crossing the 17.4 million mark on an annualized basis for new cars and light trucks in August,” said Amy Crews Cutts, senior vice president and chief economist at Equifax. “The abundance of high-quality vehicles for sale, the attractive financing options available, and the ever-increasing age of cars on the road today have created an environment that makes it easy for consumers to say ‘yes’ when it comes to purchasing a new or used car.

“Importantly, auto loan originations to borrowers with subprime credit scores remain stable, providing additional evidence that a bubble is not occurring in that space,” she added.

On that note, the total number of new loans originated year to date through June for subprime borrowers, defined as consumers with Equifax Risk Scores of 640 or lower, is 3.9 million, representing 31.2% of all auto loans originated this year. This is a slight decrease in share from this same time in 2013.

Similarly, the total balance of newly originated subprime auto loans was $70.7 billion, an eight-year high. The total also accounted for 27.8% of the total balance of new auto loans, a slight increase in share from the previous year. However, serious delinquencies represented 1.05% of total balances outstanding, a decrease of 8% from same time a year ago.

Year to date in June, the average loan amount for borrowers with risk scores of 680 or lower increased the most, showing a 3% increase from the previous year. Loan sizes among borrowers with risk scores of 760 or higher showed little change from the same time a year ago.

The report also showed that the total balance of auto loans outstanding in August was $924.2 billion, an all-time high and an increase of 10.8% from same time a year ago. The total number of auto loans outstanding stood at more than 65 million, a record high and an increase of more than 6% from the same time last year.

By source, balances on outstanding loans funded by banks, savings and loans and credit unions totaled $453 billion, while the total number of loans was more than 31.4 million. Similarly, total outstanding balances for loans funded by auto finance companies was $471.2 billion, while the total number of existing loans was 34.1 million.

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Equifax Report Reveals Growth And Stability In Auto Finance


ATLANTA – According to Equifax’s latest monthly National Consumer Credit Trends Report, automotive credit balances and new accounts are increasing steadily, with the number of new accounts opened in the first half approaching pre-recession levels.

Auto lending is gaining strength, reflecting increasing demand for new cars. Year-to-date through June 2012, total auto lending has reached $207 billion, a 13.7% increase over the volume during the same period in 2011. Sales of new cars and light trucks increased nearly 15% during the first half of the year, dominated by sales of smaller, more efficient and cheaper vehicles. In terms of the number of auto loans originated during the first half of the year, 2012 auto lending at 10.7 million loans is the highest since 2007 when 11 million loans were opened.

Delinquency and write-off rates on auto loans and leases are well below levels seen at the start of the recession. In terms of dollars at risk, write-off rates in August 2012 are one-third of what they were at the peak in March 2009 (2.1% versus 6.1%), while the number of auto account write-offs is about half of the peak volume (2.5% versus 5.2%). Write-off rates using both dollars and units exceeded 4% at the start of the recession.

“The average age of cars on the road today in the US is the highest ever recorded and consumers are ready to replace these older vehicles,” said Equifax Chief Economist Amy Crews Cutts. “At the same time, the financial picture has improved sufficiently that we are seeing auto lending markets become facilitators rather than obstacles to meeting this demand, especially in the near-prime segment of the market that had all but ceased to exist during the worst of the financial crisis and recession.”

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