Throwback to 2008? Credit Card, Auto Debt Soars to $1 Trillion
Subprime borrowing is back, this time with auto loans.
Vehicle loans and leases held by subprime consumers increased by 11 percent in Q1 this year and the for the first time since the recession, balances on auto loans hit the $1 trillion mark, up from $905 billion last year.
Non-bank finance companies and credit unions saw the largest spike in loan growth market share with 26 percent and 16 percent respectively.
“With more and more consumers relying on financing, it is important for lenders to keep a close eye on delinquency trends to ensure the market remains healthy,” said Melinda Zabritski, senior director of automotive finance for Experian, which conducted the study.
However there is some respite in the overall percentage of total delinquent loans remains relatively low when compared to pre-recession levels.
And it’s not just auto loans that are soaring, credit card debt is also pushing the $1 trillion mark inching scarily close to recession peak of $1.2 trillion in 2008. According to Federal Reserve numbers, outstanding balances touched $952 billion in the first quarter, up 6 percent last year, and the highest level since August 2009.
Last modified: May 20, 2016
Srividya's work has appeared in publications like Money magazine, Advertising Age, FirstPost and The Economic Times. She has also dabbled in business intelligence solutions, and holds a Masters degree in Business and Economic Reporting from NYU.