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As other loan delinquency categories drop, auto debts on the rise

September 7, 2018
Consumer loans more than 90 days past due have been flat or declining for nearly all loan categories, with the exception of auto debt, according to the New York Federal Reserve’s second quarter Debt and Credit Report released in August.  
"The flow of 90-plus-day delinquency for auto loan balances has been slowly trending upward since 2012," the Fed wrote in the report, noting that credit card delinquencies have started to rise in the past year as well.
A specific delinquency rate for auto is not stated in the report, but Fitch’s U.S. Auto Index records subprime 60-plus-day delinquencies at 4.41 percent through June, while prime rates are at 0.3 percent. Both rates are down year over year by 8 basis points and 7 basis points, respectively.   
Overall, consumer auto debt has ballooned, and industry players have noticed a shift since the 2008 financial crisis, said Damon Edmondson, chief of analytics at Flock Specialty Finance.
"If you go back to 2008, before the crisis, credit card debt was equal to the amount of outstanding auto loans, which makes sense because consumers were loading up their credit cards to maintain lifestyles and stave off the economic dislocation that was about to happen," Edmondson said. "When you look at the numbers now, auto loan debt is considerably higher than credit card debt. 
"Auto loans at the end of the second quarter of 2018 stood at $1.24 trillion while credit card debt was only $830 billion. [Consumers] would have to increase their credit card debt by almost 50 percent — $400 billion — in order to equal the auto loan debt."  
Comparing auto loan debt year over year, balances are up 4.2 percent, according to the report. Meanwhile, the industry originated its highest quarterly amount since 2005 with $151 billion in originations.