Auto Loan, Lease Delinquencies Below Pre-COVID Levels

The level of serious auto loan and lease delinquencies is down from a year ago, and back below pre-pandemic levels, according to credit bureau TransUnion’s recent third-quarter Credit Industry Insights Report.

“The delinquencies we’re measuring are back to the stable levels we observed pre-pandemic,” Satyan Merchant, senior vice president and automotive business leader at Chicago-based TransUnion, says in a phone interview. “It did perk up a little bit, this time last year.”

TransUnion says serious auto delinquencies, defined as 60 or more days overdue, accounted for 1.38% of outstanding loans and leases in the third quarter, down from 1.46% a year ago. In Q3 2019, it was 1.40%, the credit bureau said.

Low delinquencies are a positive sign that auto lenders are keeping loans and leases relatively accessible.

However, TransUnion also notes that the share of auto loans and leases is down for customers with subprime credit. TransUnion is also keeping an eye on delinquencies as borrowers exit hardship programs that were widely offered last year, allowing delayed payments because of COVID-related shutdowns.

Merchant says enrollment in those programs is already way down, without any negative effect on delinquencies, on average. Enrollment reached a high of 7.2% of all auto accounts in June 2020, TransUnion says. In September 2021, it was just 1.2%.

“That number has tailed off dramatically,” Merchant says. “It’s been a gradual tapering off, as government assistance – that was required, that was helpful during the pandemic – has tapered off. There’s not a large, large amount (of hardship programs) that’s going to stop suddenly, at any one time.”