Personal Debt Climbs Higher in Payment Hierarchy, Execs Say | Auto Finance News | Auto Finance News

Personal Debt Climbs Higher in Payment Hierarchy, Execs Say

SAN DIEGO — Auto loan payments are still a priority for consumers, but other personal debt obligations are on the rise, said Yordanka Martin, director of portfolio risk management and credit loss forecasting at Hyundai Capital America.

“The common conversation is, a person will definitely pay their auto loan first, since they need a car to go to work and keep their job, before they pay their mortgage,” she said Tuesday, while speaking on a panel at the 2017 Risk & Compliance Summit. “We have been observing the rising student debt, personal loan debt, and credit card debt. So, while mortgage isn’t nearly as high as it was, all these other obligations are rising — so where in the payment hierarchy are we, is something to look at.”

However, because HCA consumers are typical prime credit consumers buying or leasing their second car, it’s something the company is “not really concerned” about right now.

Martin was joined on the panel by Chris Urban, vice president of risk management at Westlake Financial Services, for a panel discussion entitled: A Current Assessment of Market Risk at the summit, which took place in San Diego, May 15-16.

Through the last cycle in 2009, subprime consumers would prioritize their auto loan payments, over mortgage payments — despite being underwater on their home loans. Today, however, Westlake prefers consumers that have mortgages, to renters, Urban said.

“We don’t have a lot of them — we’re relatively on the lower end of the market than normal homeowner purchasers,” he said. “[However] because house prices have been going up, they tend to have more equity — that’s been a positive at the moment.”

In terms of the payment hierarchy, the one thing that ranks ahead of car loans these days, are cell phone bills, “so we have to be aware of that, but fortunately that’s not as high,” Urban added.

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