Credit Unions Not Fueling Rise in Repossessions
While car repossessions were up 36.5% overall in the first quarter, the bulk of that activity is not occurring at credit unions.
According to Experian Automotive’s State of the Automotive Finance Market report released Thursday, the rise in repossessions marks a .50% increase from the first quarter of 2013 to .68% in the first quarter of this year.
However, the increase in repossessions was driven entirely by finance companies that provide a significant majority of their loans to credit-challenged customers, Experian said. In Q1 2014, finance companies’ repossession rates jumped by 69.1%, from 1.78% in Q1 2013 to 3.01% in Q1 2014.
“While the subprime auto loan market continued to grow in Q1 and credit-challenged consumers have been able to get financed more easily, a rise in overall delinquencies could cause lenders to tighten their credit standards, ultimately lessening access to credit in the future,” said Melinda Zabritski, Experian’s senior director of automotive credit.
In other findings, the total dollar volume for auto loans was $811.3 billion, the highest since Experian Automotive began publicly tracking loan volumes in 2006, the company said.
All lender types experienced growth in year-over-year quarterly loan volume, with banks up by $33 billion, credit unions up by $23 billion, finance companies up by $19 billion and captive finance companies up by $9 billion, according to Experian.
The average charge-off amount for loans gone bad jumped from $7,401 in Q1 2013 to $8,541 in Q1 2014.
One bright spot showed the national level 60-day automotive loan delinquencies fell 1.7% in the first quarter. Still, 22 states experienced a rise in late debt in this category with Delaware topping the list followed by Montana, Nebraska, Iowa and New Jersey.
Meanwhile, 30-day auto delinquencies dropped 5%, going from 2.36% in Q1 2013 to 2.24% in Q1 2014. Alaska led this category followed by Montana, Kentucky, West Virginia, Indiana and Pennsylvania.
Earlier this week, TransUnion said Alaska was also among those states that experienced the largest year-over-year increases in delinquent loan debt. Michigan topped the list with Arkansas ranking in the top three.
TransUnion said Oregon, Hawaii and California had the largest decline in delinquent auto loan debt in the first quarter.