Finance, Credit and Repossession Information Resource

America car lending stays strong yet repossessions are down in second quarter

kbb-july-2013-auto-segment-performance-chartExperian automotive has released second quarter data today reporting that American repossessions have dropped nearly 15%. Although Experian is not the most trusted company as far as reporting goes with individual credit, since they started the repossession and automotive finance  tracking over 7 years ago the data has been very accurate. They claim that people being just 30 days late have dropped year over year by 5 and a half percent despite American auto sales and lending at record highs.  From the signs of the repo companies alone this seems to be an accurate number. This could also mean that a sudden large surge of repossessions may follow in the upcoming quarters, much higher than usual.

The report also showed that the total balance of outstanding automotive loans  grew from more than $682 billion in Q2 2012 to nearly $751 billion in Q2 2013.  Banks increased their total dollar volume by $24 billion, followed by credit  unions ($18 billion), finance companies ($16 billion) and captive finance  companies ($11 billion).

Could this bubble be building

The balance of loans that are 30 days delinquent rose by $761 million in Q2 2013. Percentage wise delinquencies represent just 1.96 percent of the total loan balance, down from 2.05 percent in Q2 2012.Sixty-day delinquencies account for just 0.42 percent of the total loan portfolio dollar value. This delinquency rate is flat year over year.

Nonprime, subprime and deep-subprime loans account for 35.2 percent of all open vehicle loans in Q2 2013, up from 34.9 percent in Q2 2012.

Charge-off amounts for defaulted loans were up by $450, from $6,768 in Q2 2012 to $7,218 in Q2 2013.

As new car sales continue to increase, bank loans rise steadily and even if the late payments decrease, it’s not rocket science but overtime repossessions must rise. The question remains is the bubble continuing to build with American residents barely hanging on by a thread or will car loans continue to rise and repossessions continue to fall? The economy is clearly on a major down trend, every single shopping center has space available, more jobs are part time than ever before, malls are closing state after state.

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