CHICAGO (12/16/15)--Auto loan delinquencies will remain stable throughout 2016, despite ever-increasing loan balances, according to a recent forecast from TransUnion.
Between year-ends 2015 and 2016, delinquencies will sit at 1.11%, the Chicago-based research firm predicted. Meanwhile, it expects auto loan balances to climb over the course of the year, with the average auto loan debt per borrower rising to $18,509 from $17,985.
“With our stable, growing economy and the continued healthy pace of job growth, consumers are feeling confident enough to take on new auto loans, resulting in a healthy equilibrium between growing balances and low delinquency rates,” said Jason Laky, TransUnion senior vice president/automotive business leader. “Robust consumer loan performance, combined with declining gas prices and low interest rates, will allow lenders to offer slightly larger auto loans to consumers in the coming year without putting their portfolios at risk.”
By the fourth quarter of next year, TransUnion forecasts average loan balances will surpass $18,500, which would mark a more than $1,000 increase over the past two years. Furthermore, if that mark is reached, by the end of next year auto loan debt per borrower will have risen $3,500 higher than levels seen in 4Q 2009.
Yet delinquencies will remain low in 2016, sticking to trends seen since the financial crisis. Auto loan delinquencies reached their peak level of 1.54% in the fourth quarter of 2009.
“For the last two years, auto delinquency has remained low as consumers prioritized their auto loan payments,” Laky said. “Through the end of 2016, we expect the auto delinquency rate to remain stable at historic, seasonal norms.”