Car Loans in Trouble

The number of late payments on home loans has been steadily increasing, but now car loan payments have started dropping as well. Credit card payments are the only late payments that have not seen a major increase. The percentage of late payments on home loans has increased 1.92% for the final quarter of last year.

A late payment is defined by any payment that is 30 or more days past its original due date. The American Banker’s Association reports that “indirect” auto loans’ late payments have gone up 2.57% in the fourth quarter, which is the highest they have been since the recession of 2001. Indirect auto loans are those that are obtained from a dealership.

Other car loans’ late payments have increased somewhat as well, but not nearly as much as the ones obtained through dealerships. Experts say that this could be because the banks might use more stringent rules and restrictions than those used by auto dealerships, especially since the dealerships are trying to get rid of a car.

They say that auto dealerships will keep trying financer after financer to obtain a car loan for their customer, whereas a bank will know right away whether or not they are going to accept a car loan from a certain customer. They say that there is a good chance that as banks don’t have as much to lose as the dealerships that they might be more in a position to be pickier about their customers.

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