Car Loan Delinquencies Jump
March 7, 2008
It is not just the housing market that is struggling. Late payments are soaring for automobile loans as well. Recent reports suggest that auto loans that are at least sixty days delinquent hit a 10-year high in January 2008.
Fitch Ratings, a unit of Fimalac SA of Paris, reports that 0.77 percent of U.S. prime and sub-prime automobile asset-backed securities were more than two months behind on payments, with the rate jumping 12 percent from December of last year and 44 percent from one year ago.
Of particular interest, sub-prime late payments hit 4 percent for the first time since 1997, reaching 4.03 percent in January 2008, which is an increase of 10 percent from December and 43 percent from one year earlier.
These numbers suggest that automobile loan defaults and delinquencies will come in third place only behind home loans and credit card loans as the year progresses.
In fact, Fitch has recently reported that it expects 2008 to be a very bad year for credit card company charge off’s. Charge off’s are loans that the credit company or bank is not able to collect. This may hit fifty percent during 2008 and much of that may be accounted for in the auto loans defaults.