Though America's economic recovery seemed iffy at one time, it now appears that we're on the right track. Consumer confidence is mostly high, stocks are mostly up, and though it's not as robust as we'd like, economic growth is in mostly positive territory.
In the auto world, the recovery has had several nice effects. First, of course: consumers are buying lots of cars -- cars that they put off buying for years during the Great Recession. And second, consumers are paying their auto loans on time.
According to Experian Automotive, the number of vehicle repossessions has plummeted to its lowest point on record. Experian's State of the Automotive Finance Market reports that during Q2 of 2013, just 0.36 percent of auto loans ended in repossession. That's down from an already-low 0.43 percent recorded in Q2 of 2012, and significantly better than the previous low-water mark of 0.41 percent seen in Q2 of 2006.
Of course, repossessions constitute only the most extreme cases of loan problems. Delinquencies are down, too. As of Q2 of this year, 2.38 percent of folks with car loans were 30 days behind on their payments. That's down from 2.52 percent in Q2 of 2012.
Sixty-day delinquencies have remained flat, comprising 0.58 percent of the auto loan market. However it's important to note that that's the second-lowest delinquency rate on record, behind the 0.53 percent recorded in Q2 of 2006.
Helping to bring those numbers down is the booming number of auto loans. In Q2 of 2012, Americans held $682 billion in car loans. By Q2 of 2013, that figure had soared to almost $751 billion. So, while the dollar figure of 30-day delinquencies rose $761 million in Q2 of 2013, that sum represents a substantially smaller percentage of the total loan amount than it once would have. Ain't math grand?
Should the economy stumble, though, we could be in for some very serious trouble. According to Experian, a hefty 35.2 percent of auto loans in Q2 of 2013 were either nonprime, subprime, or deep-subprime. (That's up from 34.9 percent in Q2 of 2012.) If we hit a financial pothole -- either because of our own policies or because some other market drags us down (looking at you, Europe) -- that could have nasty implications on employment figures, which would sully the rosy delinquency numbers noted above. And the first borrowers to be affected would almost certainly be those in the subprime categories.
That would be terrible news for folks with car loans, but maybe not so much for repo men.
[h/t John Voelcker]