Skip to main content

The Big Question in Auto Loans: Why Aren’t Repossessions Increasing?

NEW YORK–A new report suggests more and more car buyers are having difficulty keeping up with auto loan payments—but raises the question over why repossessions aren’t rising.


According to a report from Automotive News, 1.63% of auto loans haven’t received a payment in at least 60 days, which is 0.4% higher than it was the same time in 2021, and the highest in the past four years.

Despite the increase, car loan default rates remain below pre-pandemic levels. Satyan Merchant, the senior vice president of TransUnion told Automotive News the increase can be attributed to changes in origination — or where borrowers stand in credit and spending.

Borrowers who took out auto loans in the second and third quarters of 2020 are keeping up with them better than pre-pandemic borrowers, according to TransUnion. But auto loans in the second and third quarters of 2021 are starting to show similar delinquency rates as debt from before COVID-19, Automotive News reported.

“There is slight worsening performance of recent vintages at a risk tier level when we isolate near-prime and above cohorts, and we suspect pandemic score migration may be playing a role,” Merchant said in a statement quoted by Automotive News.

Merchant pointed to a subprime customer whose credit improved in 2020 and was near prime for a 2021 car loan, but who now behaves more like a subprime consumer.

According to Merchant, inflation and interest rates can increase delinquencies, but unemployment is the most likely metric for the industry to watch.

The Big Question

Then question has now become, if delinquency rates are up, why aren’t repossessions? asked Automotive News.  Equifax found 2.14% of auto loans in the first six months of this year were more than 120 days behind on payments, a number that isn’t great but that is much lower than the 2.9% rate from in 2019, Automotive News stated.

In short, consumers aren’t letting the delinquencies lead to defaults, Automotive News stated.

CUToday

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 
Post a Comment
Read Complete Article HERE>»

CUNorthwest Todd A. Powell Award is SFCU CEO Gayle Furness.

Spokane Firefighters Credit Union Big Enough to Serve. Small Enough to Care. This year’s recipient of the CUNorthwest Todd A. Powell Award is SFCU CEO Gayle Furness. Like Todd, Gayle has been instrumental in the growth, as well as the safety and soundness, of the credit union. Congrats to Gayle for living up to the standard that Todd created for our organization and the greater credit union community. __ ________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board
Post a Comment
Read Complete Article HERE>»

The Shrinking Pool of Small Credit Unions: Why It Matters & What We Can Do About It. - Henry Meier, Esq.

  Henry Meier, Esq. Henry Meier is the former General Counsel of the New York Credit Union Association, where he authored the popular New York State of Mind blog. He now provides legal advice to credit unions on a broad range of legal, regulatory and legislative issues. He can be reached at (518) 223-5126 or via email at  henrymeieresq@outlook.com . For as long as I’ve been around the industry, I’ve heard concerns about the demise of the small credit union. But I’ve come to realize it’s a lot like the weather: Everyone talks about it, but no one does anything about it. This is unfortunate. We need credit unions of all shapes and sizes to survive, and if we don’t take action soon, it will be too late.  Fortunately, there are steps the industry can take to potentially decrease the rate at which small credit unions are disappearing by making it viable for credit unions to survive by getting larger credit unions interested in making the necessary investments to keep the sma...
Post a Comment
Read Complete Article HERE>»

What Are Your Plans -As Government Shutdown Continues, Credit Unions Expand Offers of Assistance

BILOXI, Miss.— With the federal government shutdown now entering its second week, an increasing number of credit unions across the country are offering relief and financial assistance. All indications are the shutdown is no closer to ending than it has been since it began on Oct. 1. While the House has passsed a continuing resolution (CR) to fund government operations in the short term, the Senate remains at an impasse, even as it has scheduled a vote for today. In addition to the earlier assistance reported by the CU Daily  here , the latest pledges to support members include: • In Biloxi, Miss., Keesler FCU said it is offering paycheck relief for all eligible federal employees affected by the shutdown and will advance the amount of direct deposit paychecks for eligible members during the shutdown for up to 90 days. There is no cost or fee to enroll in the program. • In Nebraska, Cobalt Credit Union is offering furloughed members loans of up to $5,000 with no fees or interest...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - FIRE, 101 - “financial independence, retire early,”

  Retiring at 30     FIRE, 101 Most US workers aim to retire around age 65—but for many followers of the FIRE movement, which stands for “ financial independence, retire early ,” that’s not the case. FIRE followers, who range from low- to high-income workers, typically prioritize high savings rates, relatively frugal living, and aggressive investing strategies in an effort to work less and enjoy life more in the long-term ( see five distinct approaches ). While many proponents argue that the movement is more of a mindset about achieving financial freedom than any ...
Post a Comment
Read Complete Article HERE>»