A new report shows a growing number of car and truck owners are struggling to make their monthly auto loan payments. Experian, which analyzes millions of auto loans, says the percentage of those loans that were delinquent or ended up in default with the vehicle being repossessed surged in the second quarter of this year.
"The number of delinquencies and repossessions rising is what we would expect as the auto industry sells more vehicles," said Melinda Zabritski, senior director of automotive finance for Experian Automotive. "But this slight uptick is one to keep an eye on."
The surge in delinquencies and repossessions is being driven primarily by borrowers with subprime and deep subprime credit scores. Experian considers subprime borrowers as those with credit scores of 550 to 619 while deep subprime borrowers are those with credit scores lower than 550. Combined, the two categories accounted for more than 12 million of the open auto loans in the second quarter, which is 19.6 percent of all open auto loans.
"The number of subprime auto loans has definitely increased, but overall, those loans make up a smaller percentage of all auto loans than they did during the start of the recession in 2008 and 2009," Zabritski said.