Credit quality looks OK for auto finance overall, and outstanding auto loans and leases combined hit a record $1.16 trillion at the end of 2016, up about 9 percent from 2015, according to the latest Household Debt and Credit Report from the Federal Reserve Bank of New York.
However, higher delinquencies are concentrated in the subprime segment, and there’s some evidence of lenders tightening approval standards. Therefore, problems in auto finance are potentially more serious in subprime, the New York Fed said.
The New York Fed released statistics on fourth-quarter and full-year auto finance and other household debt on Feb. 16. Analysts for the New York Fed also wrote about the results in an online blog.
Fed analysts said overall auto delinquencies were marked by slow deterioration in the fourth quarter, but nearly all of the deterioration was concentrated among subprime borrowers.
Auto delinquencies of 90 or more days -- considered seriously delinquent -- accounted for 3.8 percent of auto balances in the fourth quarter, up from 3.4 percent a year ago.
To put that in context, that’s considerably lower than the latest high for 90-day delinquencies of 5.3 percent in the fourth quarter of 2010, and not much higher than the latest low of 3.1 percent in the third quarter of 2014.
As evidence of slightly tightening approval standards, the New York Fed said the median credit for originating auto borrowers in the fourth quarter was 700, up from 696 a year ago.
The New York Fed also said 32 percent of auto origination dollars in the fourth quarter went to borrowers with credit scores over 760, up from an average of 29 percent for the first three quarters of 2016.
Like many other analysts, the New York Fed dismisses fears of a subprime bubble of too-rapid growth and easy approvals. While subprime volume has increased the past few years, the share of subprime has not been unusual, the Fed said, because prime lending has grown as well.
Fuente: Automotive news