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WASHINGTON Consumer Financial Protection Bureau Director Richard Cordray praised BMO Harris Bank on Wednesday for becoming the first indirect auto lender to switch to a flat-fee structure, limiting the amount of discretion that dealers have to price finance loans.
April 30 -
Demand for loans by consumers and businesses grew in the first quarter, according to a Federal Reserve report released Wednesday.
April 16
Car loan debt continues to rise as more and more Americans are trading in old cars for new ones, according to a report
TransUnion's quarterly report on automobile loans showed that the average debt per borrower increased by 4%, to $16,862, in the first quarter, compared to the same period last year. Over the last three years, auto loan debt has risen by almost 13%, or more than $1,900 per borrower.
Meanwhile, total number of auto loans jumped 22% in the first quarter, to 70 million, from the previous year.
"Auto sales have increased, and with that is the related auto financing," said Pete Turek, a vice president in TransUnion's financial services unit, in a phone interview. Turek added that "credit availability up and down the spectrum," and expansions in leasing have also contributed to the increase in auto debt.
Delinquency rates increased slightly in the first quarter. The number of borrowers more than 60 days late on their payments climbed to 1%, up from 0.95% at the same time last year.
Subprime delinquencies defined as loans to borrowers with credit scores below 641 climbed 41 basis points in the first quarter to 5.52% from last year.
High-risk originations are also on the rise, but remain below levels observed at the beginning of the recession. Loans to borrowers with credit scores under 700 accounted for 31.96% of the market at the end of 2013, up from 31.62% a year earlier. Nonprime originations accounted for 37.34% of originations in the last quarter of 2007.
"Auto loans to the subprime population are growing as are delinquency rates for that group, but as an industry, the level of risk is well-managed," Turek said in a press release accompanying the report.
