Past due payments on car loans spike, but primarily among subprime borrowers
On average, people are falling behind on their car loans at a greater rate than they were during the Great Recession.
But auto industry consulting group S&P Global Mobility said this time, the people who are falling behind on their car loans are concentrated in the subprime category. Those are people with low credit scores between 500 and 600.
The delinquent loans are also concentrated in the used car market.
Folks with better credit are still paying off their car loans, both used and new, at normal historic levels, despite the pressures of inflation battering their budgets.
S&P Global Mobility said lenders are dialing back on riskier loans to stem losses from the subprime sector.
Affordability will be an issue facing consumers with subprime credit scores, the group said, as underwriting standards tighten, at the same time as the availability of used cars remains low.
The report indicates that the used-vehicle market is expected to remain tight, as the low level of new car sales starting in 2020 means fewer recent model-year used cars available. Going forward, affordability remains critical to consumers, particularly those with credit scores below prime.