GREENVILLE, S.C., March 7, 2014 /PRNewswire-iReach/ -- In spite of having higher balances on their auto loans in general, car owners in the United States are still managing to make payments on time. By the end of 2013, the average debt per loan holder was about $16,769. That was 4.4% more than the previous year. For 11 quarters running, the average debt has increased, according to TransUnion. Nonetheless, the quarterly late payment average was 1.3%, lower than any quarter since 2007.
Part of the reason for this increase in timely payment appears to be low interest rates, available credit and steady gas prices. As a result, truck sales are up 8%, another best since 2007. The reason auto loan debt is higher seems to be bigger loans to start.
The debt per borrower has gone up per quarter with the fourth quarter of 2013 being .5% higher than the previous quarter. The increase was seen in every state, according to TransUnion. Buyers seem more willing to take on bigger loans.
In a normal year, late payments on auto loans tend to increase in the final quarter of the year. The same can be said for other credit lines. Christmas destroys consumers' budgets. This also happened in 2013, but the rates are still lower than usual.
In the U.S., the number of late payments three months or more overdue rose to 1.14% in the fourth quarter, .10% more than the third quarter and .3% more than 2012's fourth quarter, TransUnion said.
Of borrowers who are considered high risk or "subprime" borrowers, 6.1% were late in the fourth quarter, up from 5.7% in 2012. A good portion of these late borrowers get back on track at the start of the new year, largely thanks to tax refunds.
TransUnion's data is based off the more than 60 million loans it tracked in the fourth quarter of 2013. In 2012, it tracked 57 million.
Because it is clear more people are buying cars, lenders are making credit lines more available, even if the borrowers are subprime. As such, the number of new loans for vehicles is up by 11% from 2012. That is about 6.6 million new auto loans.
About 32.5% of new auto loans initiated in the third quarter were to subprime borrowers, which is .1% higher than the same quarter in 2012. While the numbers are creeping up, the percentage was about 37 before the recession in 2007. The percentage had reached 25.6 in 2009, so a rise in subprime loans since that period is evident.
Borrowers who have a credit score lower than 700, based on the VantageScore model, are considered subprime. The model goes all the way up to 990, with borrowers with a score of 900 being the most reliable based on their credit history.
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