Experian Report Shows Decreased Delinquency Rates on Auto Loans in Q1 2020

According to Experian’s most recent State of the Automotive Finance Market Report, delinquency rates on automotive loans went down during the first quarter of 2020, even as the industry dealt with the COVID-19 crisis and its financial impact on consumers.

The report found that 30-day delinquencies fell from 1.98 percent in Q1 2019 to 1.93 percent in Q1 2020, while sixty-day delinquencies decreased from 0.68 percent to 0.67 percent throughout the year.

“The decrease in delinquency rates is a positive sign for the industry, though it’s important to recognize other factors may have attributed to the trend,” said Melinda Zabritski, senior director of automotive financial solutions. “Some consumers are likely leveraging financial resources and assistance programs, such as stimulus checks, to manage through financial hardship, so its true impact may not be evident until the months ahead.”

The report found that to maintain affordability in the industry, average loan amounts increased to $33,739 for new vehicles and $20,723 for used vehicles. Average monthly payments also increased slightly: from $554 in Q1 2019 to $569 in Q1 2020 for new vehicles, and $391 in Q1 2019 to $397 in Q1 2020 for used.

Used vehicle loans are most popular in Mississippi, making up 78.45 of their auto loans, followed by Indiana (77.89 percent), Tennessee (77.78 percent), Michigan (77.51 percent), and Minnesota (77.24 percent). “Understanding data points like where used vehicle loans are most prominent can help lenders and dealers make informed decisions as consumers begin to re-enter the market,” Zabritski said.

Additionally, Experian studied finance trends in April to better understand the impact of the pandemic on the automotive industry. It found a 50.8 percent drop in new vehicle title changes, a 54 percent drop in used vehicle title changes, and a six percent drop in new vehicle leasing.