Posts Tagged ‘auto loan’

Most Americans Die With Debt

Posted on August 04, 2017 by Laura Lam

You’re probably going to die with some debt to your name. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. The data is based on Experian’s FileOne database, which includes 220 million consumers. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by…

Subprime Auto Defaults are Soaring

Posted on August 02, 2017 by Laura Lam

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud.  Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.  A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.  In July, 90-day auto loan delinquency rates eclipsed 3.8%, their highest levels since the financial crisis. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great…

Consumer Delinquencies on the Rise

Posted on July 06, 2017 by Laura Lam

Delinquencies in both open- and closed-end loans rose in the first quarter of 2017, according to the ABA Consumer Credit Delinquency Bulletin released today.  The rise in closed-end delinquencies was driven by an uptick in late payments on auto loans, the report noted. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, rose 5 basis points to 1.56% of all accounts, but remained well below the 15-year average of 2.17%. Delinquencies in indirect auto loans rose 8 basis points to 1.83% of all accounts, while direct auto lending delinquencies increased by 9 points to 1.03% of all accounts….

Bank Card Default Rate Increases, Auto Loan Defaults Down

Posted on May 15, 2017 by Laura Lam

The S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, shows the composite rate unchanged from last month at 0.94% in March. The bank card default rate recorded a 3.31% default rate, up 9 basis points from February. Auto loan defaults came in at 1.00%, down 5 basis points from the previous month. The first mortgage default rate came in at 0.75%, up one basis point from February and reaching a one-year high. The 5 major cities showed mixed results in March with two higher and three lower default rates. New York had the largest…

Millennials’ Debt Load Could Weigh Down Economy

Posted on May 09, 2017 by Laura Lam

Millennials — 21 to 34-year-olds — hold an estimated $1.1 trillion of the country’s $3.6 trillion in consumer debt, according to UBS, as rising student and auto loans outweigh a drop in mortgages.  All that rising debt is coming with rising default risks. A UBS evidence lab survey found that 52% of people worried about defaulting on any loan over the next 12 months were in the 21 to 34 age group. That’s not good news considering those same individuals are meant to be the largest source of spending on big-ticket purchase items like houses and cars over the next year.  There is already…

Consumer Defaults Predicted to Rise in 2017

Posted on April 24, 2017 by Laura Lam

About 17% of all U.S. consumers are likely to default on a loan payment over the next year, according to a recent report from UBS. More interesting, perhaps, is who these defaulters are.  The UBS Evidence Lab reports that the group’s profile is “middle and upper income, younger, male, urban, and concentrated in the coastal regions.” The UBS researchers also found evidence that defaults on auto loans are likely to spread to more non-prime defaults on credit cards and personal loans. About 16% of all auto loans outstanding are subprime, amounting to $179 billion out of total auto loans of…

Student Loan Debt May Have Adverse Long-Term Impact

Posted on April 17, 2017 by Laura Lam

Rising student loan debt in the United States could ultimately hurt overall home ownership and consumer spending and erode colleges’ and universities’ ability to elevate lower-income students.  New York Fed President William Dudley, an influential monetary policymaker who was citing research from his institution, pointed to rising costs of higher education and student debt burdens as culprits in the troubling trend. Overall U.S. household debt is expected to surpass its pre-recession high later this year. Proportionally, Americans have shifted away from housing-related debt and toward auto and student loan debt, with aggregate student loan balances $1.3 trillion at the end of last year, up…

Auto Loan Defaults Not Likely to Cause Next Bubble

Posted on April 10, 2017 by Laura Lam

An increase in the delinquency of risky auto loans probably won’t send the U.S. economy into the doldrums the way the mortgage loan crisis did in 2008-09, but it will likely pinch car sales.  Borrowers are falling behind on most subprime car loans, but deep subprime consumers – those with credit scores below 550 – have deteriorated fastest, according to a report by Morgan Stanley. Just like mortgages, many of those loans have been packaged into bonds, “securitized” in Wall Street parlance, and sold across the world to investors searching for yields in the wake of the financial crisis. Car…

Auto Finance Fraud Could Hit $6 Billion

Posted on March 30, 2017 by Laura Lam

PointPredictive, a provider of fraud solutions to banks and finance companies, details a new analysis confirming that auto financing fraud risk has been rising for several years, but remains hidden in credit losses.  PointPredictive estimates the annual value of auto finance originations that contain some element of misrepresentation may be as high as $6 billion in 2017, which is twice as much as 2016 estimates. The analysis revealed that auto financing fraud can be broken into 3 separate categories: Known fraud that finance companies have been able to identify. Hidden fraud that ends up misclassified as early or first payment…

Are Automakers Creating the Next Financial Crisis?

Posted on March 06, 2017 by Laura Lam

The country’s auto debt hit a record in the fourth quarter of 2016, according to the Federal Reserve Bank of New York, when a rush of year-end car shopping pushed vehicle loans to a dubious peak of $1.16 trillion. The combination of new car smell and new credit woes stretches from Subarus in Maine to Teslas in San Francisco.  It’s an alarming number, big enough to incite talk of a bubble. On average, every licensed driver in the U.S, owes about $6,100 in car payments. But the market for cars is a lot different than that for houses. Vehicles are a more fluid asset…