New auto loans may be on the rise, according to the Federal Reserve Bank of New York, but auto loan delinquencies are also increasing.
The household debt and credit report from the New York Fed stated consumers took out $101 billion in new auto loans in the second quarter of 2014. This is the most new auto debt taken out in a three-month period since 2006, according to USA Today.
While new loans are increasing, late payments on current auto loans are also growing, according to Experian Automotive's state of the automotive finance market report. A rise of 7 percent was seen in 60-day auto loan late payments during the second quarter this year and 30-day delinquencies saw a small bump from 2.38 percent to 2.39 percent in the same period, Credit Union Times reported.
The amount of outstanding loans that are more than 60-days late has increased $859 million since the second quarter of 2013 and the amount of borrowed funds that are 30 days delinquent has increased $2.8 billion from this time last year.
The slight rise in late payments is not enough to lift auto loan delinquency rates out of historic lows, though, according to Experian Automotive's senior director of automotive finance Melinda Zabritski, as reported by Credit Union Times.
"The rosy glow of perfect payment performance in the automotive space is beginning to tarnish," Zabritski said. "We'll want to keep an eye on how consumers pay their bills in the coming months, as it may dictate the availability of credit in the future."
Should credit unions expand auto loan programs?
The economy is improving and it shows by the number of new auto loans consumers are taking out. As credit unions deal with fewer mortgages and mortgage delinquencies, the organizations can get back to doing what matters - fulfilling their members' needs, according to Credit Union Times.
If more consumers are interested in buying cars, credit unions should improve their vehicle-purchasing resources. These resources can include auto-shopping guides, insurance-finding guides, auto loans, extended warranties and more. Whatever information and help a credit union chooses to provide, it should reflect the needs and desires of its members.