This blog recently discussed how U.S. consumer debt has drastically dropped to its lowest levels in several years. Not only are borrowers lowering the amount of money that they owe, but they are becoming more fiscally responsible, according to data from TransUnion.
In an example of becoming more fiscally responsible, although the average auto loan balance for Americans has risen to $13,435 in the second quarter, shoppers are remaining current on their payments. That number is a 4.5 percent increase year-over-year and a 1.3 percent rise from the first quarter. However, the rate of U.S. auto-loan payments late by 60 days or more essentially stayed the same from April to June—just a 0.01 percent increase.
“It’s encouraging to see consumers take on more auto debt while delinquencies remain low,” Peter Turek, TransUnion’s vice president of automotive told the Associated Press. “Consumers clearly are more confident in managing additional debt.”
The AP explained that as consumers grow more confident, lenders are beginning to take notice and are offering loans to customers with subpar credit scores. Often, these loan options will have higher balances early on, which will push up the average balance.
Overall, the amount of auto loans in the U.S. grew 4 percent from the same time last year.
While not all financial institutions might be ready to offer loans to subprime borrowers, it is important to take note of trends like these. As consumers grow more confident, it could cause an influx of potential borrowers. With up-to-date application processing software, organizations can be sure that they find clients who meet their standards and will remain timely on all payments.