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Auto loan balances reach all-time high

Photo credit: BLOOMBERG

Strong U.S. light-vehicle sales pushed outstanding auto loan balances to an all-time high in the third quarter. Still, consumers are paying their auto loans, Experian Automotive said today.

Outstanding auto loan balances reached $968 billion in the third quarter, a high since Experian started tracking the numbers in 2006 and up 11 percent from the third quarter of 2014, data released from Experian’s third-quarter 2015 State of the Automotive Finance Market report show.

Auto loan balances in the third quarter of 2015 were more than 53 percent higher than the post-recession low of $631 billion in the third quarter of 2010.

Auto loan delinquency rates dropped a bit in the third quarter, showing that most borrowers are paying their auto loans, Experian said.

Thirty-day delinquency rates dropped to 2.5 percent, a 0.2 point decline from the year-earlier period. Sixty-day delinquencies also fell slightly, to 0.73 percent vs. 0.74 percent a year earlier.

Loan volume increased in each risk segment in the quarter, with the most significant rise in the superprime segment, defined as borrowers with the highest credit scores. But there were also spikes in each of the lower-credit tier segments. Here’s a breakdown:

• Superprime loan volume rose 8.3 percent (781-850 credit scores).

• Prime loan activity advanced 6.3 percent (661-780).

• Nonprime lending increased 7.7 percent (601-660).

• Subprime jumped 7.8 percent (501-600).

• Deep subprime climbed 5.6 percent (300-500).

Superprime and prime made up 61 percent of open loans combined in the third quarter, while nonprime, subprime and deep subprime combined accounted for 39 percent.

The risk segment mix demonstrates that “the surge in outstanding automotive financing is driven by consumers across the board, not a specific segment of the market,” Experian said in a statement.

U.S. light vehicles sales reached 16,522,662 in 2014, up 43 percent from 11,589,844 units in 2010, according to the Automotive News Data Center. U.S. new-vehicle sales rose 6.2 percent in the third quarter this year compared to 2014.

You can reach Hannah Lutz at hlutz@crain.com -- Follow Hannah on Twitter: @hm_lutz

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