SCHAUMBURG, Ill. (2/20/15)--Total outstanding balances on car loans continued their upward climb in the fourth quarter of 2014, reaching an all-time high of $886 billion, according to Experian Automotive.
However, while the volume of open loans increased across all risk tiers, market share for subprime and deep-subprime loans remained at relatively low levels, as much of the growth from a year ago was seen in the deep-subprime risk segment, Experian reported.
Whenever there is an uptick in the number of loans to subprime and deep-subprime customers, there is the potential for a 'sky is falling' type of reaction," said Melinda Zabritski, Experian's director of automotive finance. "The reality is we are looking at a remarkably stable automotive-loan market, in part because consumers are continuing to stay on top of their payments.
"With that said, keeping an eye on consumer payment behavior and the lending community's appetite for risk is important because these types of insights help the industry make better decisions that may affect loan terms or interest rates in the future," Zabritski added.
While the volume of loans in the subprime and deep-subprime risk tiers were up from last year--3.83% and 5.6% , respectively--the combined market share for the two was down slightly at 20.31%. On the other end of the spectrum, the volume of loans to super-prime consumers was up 7.9% from a year ago. It also was the only risk tier to see a year-over-year increase in market share.
Credit union loan portfolios also posted a solid calendar year in 2014, according to CUNA's monthly credit union estimates (News Now Feb. 6)
Credit union loans outstanding rose by 10.2% during the 12-month period, the fastest jump since 2005 when loans expanded by 10.7%.
Roughly 16.5 million new vehicles were sold in 2014, a 5.8% increase over 2013's number, according to numbers from AutoData, and it appears many purchases were financed through credit unions.