By the end of 2017 the average auto loan debt will be $18,588 and by the final quarter of 2018 it is expected to increase to $18,694.
In their annual consumer credit forecast, TransUnion predicted that in 2018 auto loan delinquencies are expected to increase, however, there is a reduction in the rate of increase and will stay below the 2008 and 2009 peaks.
In the markets impacted by Hurricanes Irma and Harvey, new-vehicle purchases are expected to see a short-term boost. TransUnion is expecting a move to used vehicle sales in the long-term and this is expected to balance some dwindling demand for new vehicle purchases.
According to Senior VP and TransUnion’s auto line of business leader Brian Landau, although the increase in auto loan balances will probably keep slowing in 2018, there might be some exclusions in that direction, particularly in at the beginning of 2018. As many as 900,000 vehicles will need to be replaced as a result of the hurricanes in Texas and Florida. This could negatively impact the debt per borrower as well as total balances at the beginning of 2018.
In the last quarter of 2017 the past due of 60 days or over for auto loans are expected to hit 1.43%, and then reach 1.46% in the final quarter of next year. These numbers indicate an 18.7% price increase from Q3 of 2013 when major auto delinquencies hit 1.23%
In Q4 of 2017, a borrower is expected to have an average auto loan debt of $18,588, which is expected to increase to $18,694 in Q4 of the next year, as per the calculations of the credit agency.
A transition in financing to lower-risk consumers ought to pad the market over the following couple of quarters, with the average total financed for an auto loan is anticipated to increase at a more sluggish rate, since loan companies increasingly demand more substantial down payments to satisfy underwriting demands.
Landau stated that in recent times, you might notice the normal seasonal variations in major delinquency rates. By the middle of 2018 delinquencies could drop almost 20 basis points and then increase by the end of the year by about 3 basis points higher compared to those towards the end of 2017.