Auto loan delinquencies hold steady

US auto loan delinquencies remained steady over the first three months of the year, even though car loan and lease volumes increased and the average automotive debt per borrower hit a record $17,508, according to data from TransUnion.

The credit ratings agency says more than 71 million consumers had an auto loan in Q1 2015, an increase of 1.2 million from Q1 2014 and the largest growth since the Great Recession, according to its latest auto report.

The biggest increase was amongst younger car buyers, with 8.5% year-over-year growth in consumers under age 30.

In Q1 2015, auto loan delinquency rates (the ratio of borrowers 60 days or more delinquent on their auto loans) remained steady at 0.99%, unchanged from Q1 2014. On a quarterly basis, the delinquency rate dropped from 1.16% in Q4 2014, a decline of 14.6%.

“Even as more consumers have access to an auto loan or lease, we’re seeing a continued low level of delinquencies on a year-over-year and quarterly basis,” said Jason Laky, senior vice president and automotive business leader for TransUnion.

Auto loan debt per borrower rose 3.8% from $16,865 in Q1 2014 to $17,508 in Q1 2015. On a quarterly basis, auto loan debt increased from $17,453 in Q4 2014, marking the 16th straight quarter of increases. Auto loan balances rose in every state from Q1 2014 to Q1 2015.

Among the nation’s largest cities, Atlanta (up 5.9%) and Houston (up 5.4%) experienced the largest increases in auto loan balances. Dallas, an oil-rich market, experienced a 1.7% decline in its delinquency rate, down from 1.05% in Q1 2014 to 1.03% in Q1 2015. “We have yet to see a negative impact on auto lending in the areas with high exposure to the oil industry,” added Laky. “Loans and balances continue to grow, while delinquencies continue to remain in check.”

TransUnion recorded 66.1 million auto loan accounts as of Q1 2015, up from 64.8 million in Q4 2014. On a year-over-year basis, auto loan accounts increased 8.4% from 60.9 million in Q1 2014. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased 8.3% year-over-year to 6.2 million in Q4 2014, up from 5.7 million in Q4 2013.

Origination growth in the sub-prime risk tier increased 6.2% from Q4 2013, comprising 15% of the new loans in Q4 2014. Sub-prime delinquency rates increased slightly from 5.14% in Q1 2014 to 5.19% in Q1 2015.

“Following a harsh winter that dampened economic activity in parts of the US, the demand for auto loans remained strong,” said Laky. “The growth in both the number and size of new loans across all risk tiers reflects Americans’ continued appetite for new cars. As sub-prime originations grow, the delinquency rates have remained relatively steady. While lenders appear to be effectively managing risk across all credit risk tiers, consumers may also be benefitting from an improved employment environment.”