Delinquent monthly payments for auto loans in the United States have apparently now reached alarming levels. One of the largest credit reporting firms in the country revealed that more and more Americans are now failing to make monthly payments for their automotive loans. Experian reported that the number of delinquent payments rose in the fourth quarter of last year.
According to the credit reporting bureau, delinquent loans that are more than 60 days unpaid have increased to 0.78 percent, higher than the 0.76 percent in the previous year. Senior director of automotive financial solutions for the bureau, Melinda Zabritski, explained that the trend has actually been going up over the past few years and may continue to do so with the country's volatile economic climate. However, she noted that the numbers are still below the record that was set in 2009, which was shortly after the global financial crisis.
Economic analysts have revealed that the increasing trend may be an indication of the growing number of Americans that are now financially struggling to make end's meat. This outlook is mirrored by the Federal Reserve Bank of New York's recent report, which revealed that more than 7 million auto loan accounts in 2018 are now at least three months behind on payments. While the percentage of increased delinquencies may look lower than it was when compared to 2009, the number of delinquent accounts is actually higher now because of the massive growth of the auto loans industry.
Experian's report also reveals that more Americans are now applying for different auto loan deals than ever before. As of the third quarter of 2018, the total value of the loans has reached US$1.7 billion. One of the main reasons for the increase in the total amount is due to the growing demand for sport utility vehicles (SUVs) and pickup trucks. These types of vehicles command a higher sticker price than regular sedans.
The average amount that is being paid by each auto loan customer as of December 2018 stands at US$37,260. This is a significant increase when compared to the average transaction price of US$6,598 in 2010. Due to the increase in the amount that is being borrowed, monthly loan payments have also increased. The average monthly payment for today's auto loans is US$545, a significant increase when compared to the US$30 average monthly payment in 2010. According to Experian, the increase in delinquencies not only applies to brand new vehicles but also to used ones as well. As of last year, the average used vehicle loan amounts reached a record US$20,000 with an average monthly payment of US$387.
