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Auto Loan Payment Important to Consumers

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Study Shows Auto Loan Payment Important to Consumers

In the typical auto lender/borrower relationship, lenders are often extremely wary of financing vehicles for anyone with less than stellar credit. While the restrictions have relaxed somewhat in recent years—mainly out of necessity for lenders—automobile dealers and lenders are keenly aware of what’s at stake when dealing with high-risk customers. Late-payments, defaults, and even vehicle repossessions are all possible.

What many automotive lenders fail to realize, though, is that the stakes are just as high for consumers. In fact, oftentimes, it’s their livelihood that is on the line. Without vehicle transportation, borrowers may struggle to get to work, get their kids to school, and do so many other things that we often take for granted. It’s no surprise then, really, that a new study affirms the importance consumers place on paying their auto loans on time.

The Transunion report, part of a wider study on consumers, found that consumers place a higher emphasis on paying their auto loans than they do both their credit cards and mortgages. According to the study’s co-author, Ezra Becker, this has been the case since at least 2003. “Even when home values were skyrocketing, even when unemployment levels were essentially at a point where we were at full employment, auto loans were still the first thing to get paid.”

The study, conducted over a 10-year period from 2003-2013, found that the auto loan delinquency rate over that period was 0.87 percent, while the delinquency rate for mortgages (1.71 percent), and credit cards (1.83 percent) were substantially higher.

These findings should be welcome news for automotive dealers and lenders, and will hopefully serve as a reminder to them that the majority of borrowers are responsible.

To learn how to expand your loan portfolio without the risk, find out more about Spireon’s award winning automotive collateral management platform.

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