Subprime Auto Delinquency Is Near Crisis Levels at Non-Bank Lenders
- N.Y. Fed report shows late-payment divergence by lender type
- In the aggregate, lenders are hewing toward prime borrowers
Photographer: Daniel Acker/Bloomberg
There’s a growing rift in car debt: Delinquent subprime loans are nearing crisis levels at auto finance companies, while loan performance at banks and credit unions has been improving, data from the Federal Reserve Bank of New York show.
Almost 9.7 percent of subprime car loans made by non-bank lenders -- including private-equity-backed firms catering to car dealers -- became 90 or more days past due in the third quarter, the highest annualized rate in more than seven years, according to the New York Fed’s quarterly report on household debt and credit. That’s more than double the 4.4 percent rate for subprime loans made by traditional banks, a number that’s been falling pretty steadily since the end of the financial crisis.