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Auto Loans Reach An All-Time High

Nov 06, 2015

The amount of money borrowed to pay for new and used vehicles climbed to an all-time high of $968 billion, in the third quarter, according to new data from Experian. Experian reports that 61.3% of the money borrowed during the third quarter was by drivers with prime or super prime credit ratings. By comparison, 19.3% of the loans were taken out by those with subprime and deep subprime ratings. Both auto sales and vehicle prices are increasing, which is driving the total loans closer to the trillion-dollar mark.According to Autodata, an automotive research firm, new vehicle sales in the United States were up nearly 6% year-to-date in 2015, compared to the same time frame in 2014. If sales stay at that pace during the final two months of the year, the U.S. will set a record for annual sales with an expected total of 17.46 million vehicles, according to Autodata. Experian reports that the number of subprime loans issued has gradually increased since the same time period in 2011, when the percentage of money borrowed by subprime and deep subprime credit was 18.%. Even though the percentage of loans to subprime borrowers has increased, Experian finds that the percentage of borrowers who have fallen behind on their payments remains at a very low rate. In fact, 30 day and 60-day delinquency rates both dropped in the third quarter compared to one year ago.