More Americans fell behind on their auto-loan payments in the third quarter, when back-to-school shopping and other needs traditionally put a strain on consumers' wallets.
But the uptick is likely only a seasonal blip in an otherwise multiyear decline in auto-loan delinquencies, reporting agency TransUnion said Tuesday.
The rate of U.S. auto-loan payments at least 60 days overdue rose to 0.38 percent from 0.33 percent in the second quarter, the company said.
That represents only a slight uptick from the second quarter, which marked the lowest delinquency rate on TransUnion's records going back to 1999.
The July-to-September delinquency rate also was down 19 percent from the 0.47 percent rate a year earlier, the firm said.
All told, the auto-loan delinquency rate has fallen on an annual basis for 12 consecutive quarters.
"Based on the data, this looks like it's attributed to really just the seasonal factors," said Peter Turek, a vice president of TransUnion's financial services business unit.
Since the housing collapse in 2007 and recession that followed, many borrowers have made keeping up with car payments a priority above paying their mortgage or other financial obligations.
Other factors also have influence the trend, including low interest rates on loans, which have made financing more affordable. A strong market for used cars also has played a role in lowering auto-loan delinquency rates because it has given borrowers an incentive to avoid falling behind on payments.
As a result, auto-loan delinquencies have fallen 56 percent since the recession high of 0.86 percent set in the fourth quarter of 2008, TransUnion said.
The trend has held up even as drivers have been taking on higher levels of auto-loan debt.
In the third quarter, bank auto debt per borrower grew 5 percent to $13,571, up from $12,902 a year earlier, TransUnion said.
One reason for that is that banks are making more auto loans, which tend to have higher balances early on, as it typically takes several years for borrowers to pay them down.
The rise in auto sales also has spurred banks to step up lending even to borrowers with less-than-stellar credit.
TransUnion's analysis of data on new auto loans lags by a quarter, so the most recent figures are for the second quarter.
Nearly 33 percent of new auto loans issued in the April-to-June period were made to nonprime borrowers, up from 30.2 percent a year earlier. Non-prime borrowers are defined as those with a score between 501 and 700 on the VantageScore credit scale, which runs between 501 and 990, with borrowers scoring at 900 or above being considered prime borrowers, or the safest credit bet.
The portion of all auto loans that went to nonprime borrowers in the second quarter was up 27.5 percent from the same period two years earlier.
In all, new auto loans and leases grew by 16 percent in the second quarter from a year earlier, TransUnion said.
The average balance of new auto loans also increased on an annual basis in the second quarter, rising 2.4 percent to $17,829.
Given the rise in auto loans going to higher-risk borrowers and the uptick in average balances, it's plausible that the auto-loan delinquency rate could inch up in the fourth quarter, Turek noted.
"However, as the economy continues to improve and new and used auto demand maintains its current pace, we believe that the auto-loan delinquency rate will either remain the same or even drop a few basis points by the end of the year," he said.