Worries that auto lenders were again back to their old ways of writing risky loans may prove to be unfounded. The percentage of subprime loans is now falling.
Subprime or deep subprime loans made up 19.7% of the market in the first quarter, the lowest percentage since 2012, EA reports.
Yet with employment strong across the country and new cars costing more, auto loans are reaching record levels. They hit $905 billion in the first quarter, up 11.3% from a year ago.
In addition, the number of borrowers who fell 30 days behind in their payments fell 4.1% from a year ago. Those behind 60 days went down 3.2%.
“The current stability in the automotive loan market is a testament to consumers making timely payments on outstanding loans, which is evident in the improvement in delinquency rates,” says Melinda Zabritski, senior director of automotive finance.
READ MORE