Auto loan debt in the U.S. hit record highs in the fourth quarter spurred by year-end incentives for new vehicles that pushed the auto finance industry to a $1.16 trillion peak in 2016, the New York Federal Reserve said in its first quarter 2017 Household Debt and Credit report.
Auto loan debt balances — which have grown every quarter since 2011 — again grew by $22 billion in the fourth quarter compared to a $19 billion increase during the same period the year prior.
Financial institutions originated $142 billion in auto loans in the fourth quarter, making 2016 the highest volume year for auto loans in the 18-year history of tracking data.
A lot of the volume was driven in the final quarter of the year by incentives, which were at 11% of the original manufacturer’s suggested retail price, Anil Goyal, senior vice president of operations at Black Book, previously told Auto Finance News.
Delinquencies rose industry wide to 3.8%, up 0.2% above the third quarter, the report states. That has caused many in the industry to tighten their credit standards as the median Fico score rose to 700. Furthermore, the percentage of money originated to borrowers with credit scores above 760 grew to 32%, up from 29% in the third quarter.
