Auto lending stays in high gear

If the auto lending business was this year’s new model, car fans would be talking about its great pickup and its admirable depreciation.

The pickup

The latest quarterly research by TransUnion indicates that this credit sector continues to accelerate, any way you clock it.

TransUnion found that average auto debt per borrower rose by nearly 13% since 2011, a three-year rising trend. Debt per borrower increased 4.1%, year over year, to $16,862 from $16,191 in the first quarter. First quarter average debt also pulled a bit ahead of the level seen in the fourth quarter, $16,769.

TransUnion said that the continuing rise in auto borrowing is a healthy sign for auto sales and related credit. There were 70 million outstanding auto loans at the end of the first quarter, up 34% from the first quarter of 2013. TransUnion analysts see this as evidence of strong demand for cars and strong availability of auto credit.

Credit performance review

The credit tracking company also reported on loan performance. TransUnion defines auto loans as delinquent if they are 60 days or more in arrears.

The auto loan delinquency rate rose to 1% in the first quarter, from 0.95% in the first quarter 2013. However, the rate for the first quarter was down compared to that of the fourth quarter of 2013—1.14%. TranUnion called the 14 basis point drop “especially encouraging.”

Meanwhile, nonprime lending—to borrowers with VantageScore 2.0 credit scores lower than 700—is growing. The level rose in the final quarter of 2013 by 34 basis points over the year earlier, growing to 31.96%. This remains below the 37.34% seen at the beginning of the Recession, in the final quarter of 2007.