Home > Auto Loans > Auto Loan Balances Are at an All-Time High

Comments 0 Comments
Advertiser Disclosure


Auto loan balances increased more than $100 billion in the past year, with outstanding loan balances reaching $782.9 billion in the third quarter of 2013. That’s a new high for auto loan balances, according to Experian Automotive, which started reporting the data seven years ago.

Not only are consumers increasingly taking on car loans, they have continued the trend of managing them responsibly, with 30-day delinquencies at 2.58% of auto loans this past quarter; they were at 2.67% for the same quarter last year.

“The availability of credit, combined with consumers’ continued strong performance repaying their loans, has a positive spiral effect,” said Melinda Zabritski, senior director of automotive lending for Experian Automotive, in a news release about the data. “It allows lenders to slowly but surely take on additional risk while providing more access to loans and paving the way for higher auto sales.”

Loan balances are growing across the country. California, Texas and Nevada reported the highest spikes in balances (up 29.3%, 26.3% and 26%, respectively), but even states on the other end of the spectrum saw growth: Balances were up 12.4% in Hawaii, 12.3% in Wyoming and 6.8% in Michigan. At the same time, Hawaii had the sharpest decline in 30-day delinquencies (down 12.75%), followed by Vermont and Oregon (down 11.69% and 11.64%, respectively).

The report wasn’t all positive: Rhode Island saw an 18.53% spike in 30-day delinquencies — the next highest jumps came from Wyoming (up 11.98%) and Alaska (up 10.24%). Vehicle repossession rates also increased, rising from 0.4% to 0.62% of all auto loans in the past year.

In the news release, Experian noted the increase in repossessions came solely from loans serviced by finance companies, “which typically provide loans to the subprime market.”

While the 30-day delinquency rate fell and the 60-day delinquency rate held steady, the average dollar amount past due rose slightly in both categories, as did the average charge-off amount on failed auto loans. (A charge-off is when a lender writes off the amount borrowed, because they expect it won’t be paid back.)

As Zabritski noted, strong repayment behavior helps when it comes to credit availability. Consumers with good payment histories tend to have higher credit scores, which give them access to better financing opportunities, and at the same time, lenders are more willing to take on risk. Car shoppers can get a good idea of how they’ll look to lenders by reviewing their credit reports and credit scores before they step into the showroom — credit reports are available for free on an annual basis from Experian, Equifax and TransUnion, and Credit.com offers a free credit-scoring tool for consumers to access their updated scores each month.

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team