A new report released this week by Experian Automotive says that the amount of U.S. borrowers that were at least two months behind on their car loan payments "jumped sharply" during the third quarter.
The 60-day delinquency rate for U.S. auto loans increased almost 9 percent to 0.62 percent during the third quarter compared to the same period in 2013.
In comparison, delinquency rates for the industry during the second quarter stayed the same at 0.58 percent from their level in 2013, according to the report released this week.
Melinda Zabritski, Experian's senior director of automotive credit, said in a statement to Reuters that the rise in delinquencies was expected since loans to subprime borrowers have taken up a growing number of the auto finance market over the last couple of quarters.
Almost two out of every five auto loans that were outstanding as of the third quarter went to "subprime borrowers."
Subprime borrowers are those with credit scores of less than 660 on a scale of 300 to 850, according to the Experian Automotive report. The share of auto loans that went to "deep subprime" borrowers with credit scores between 300 and 500 rose to 3.84 percent from 3.57 percent during the third quarter of last year.
Subprime auto lending practices at auto finance companies, automakers' in-house finance arms and banks have come under regulatory scrutiny during the last couple of months.
Mississippi (4.5% delinquent for 30 days, 1.4% for 60) Louisiana (3.7% and 1.16%) and Alabama (3.5% and 1.05%) were among the five highest states when looking at the geography of delinquencies. Law enforcement officials and regulators have opened investigations into lenders like Ally Financial Inc, Capital One Financial Corp, Santander Consumer USA Holdings Inc, GM Financial and others over car loans they've made to "less" creditworthy borrowers, according to Reuters.
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