Auto Loan Picture Calms
Serious auto loan delinquencies started rising in 2022 and are at about 1.5% this year. TransUnion projects they’ll fall to 1.4% next year.
Pexels/Sora Shimazaki
Automotive loan delinquencies, after two straight years of increases, are forecast to stabilize as 2024 winds down.
Many consumers, beset by inflation and high interest rates intended to curtail it, have struggled to keep up with heavier debt loads.
Now projections by credit reporting agency TransUnion have delinquencies flattening in the fourth quarter and falling a year from now.
Meanwhile, the rate of serious delinquencies are expected to stay flat this quarter before falling about seven basis points in next year’s fourth quarter, TransUnion forecasts. It classifies serious delinquency cases as 60 or more days in arrears.
“One common thread that we see across lending categories is moderation in serious delinquency, likely driven by a stabilizing economy,” said company Head of Financial Services Jason Laky in a press release.
Serious auto loan delinquencies started rising in 2022 and are at about 1.5% this year. TransUnion projects they’ll fall to 1.4% next year.
“Consumers are returning to a financial equilibrium, increasingly finding the room needed in their monthly budgets to make on-time payments and avoid falling behind,” Laky said. “Economic conditions are forecast to continue to gradually improve in 2025. As lenders look for loan growth next year, they should use all of the tools at their disposal to make the best possible lending decisions.”
TransUnion’s forecast is based on conditions such as anticipated consumer spending, disposable personal income, inflation, unemployment rate other metrics.