New car sales may have tumbled in September, but the latest data from the American Bankers Association indicates that the default rate on auto loans is on the decline. The report takes into consideration loans made indirectly through dealers and directly to consumers.
According to the ABA’s findings, the percentage of auto loans through dealers that were 30-days past due declined to 3.26 during the second quarter, compared to 3.42 percent during the first quarter. Direct auto loans to consumers that were 30-days past due also fell during the second quarter, dropping to 2.46 percent from Q1’s 3.01 percent, according to Automotive News.
Many analysts view the drop in auto delinquencies as a sign that the U.S. economy is on the path to recovery. In fact, consumer spending increased at the fasted rate since 2001 in August, with the Commerce Department reporting a 1.3 percent increase in consumer spending.
However, unemployment claims during the last week of September climbed to a seasonally adjusted 551,000 — outpacing the previous week’s 534,000 –- indicating that a full economic recover could still be a ways off.
