Headwinds Increase for Auto Finance Featured

By Staff Writer December 30, 2018

There are many factors that may impact auto affordability in the coming year, which could result in a slowdown in origination growth, TransUnion reports.

The potential of rising tariffs could materially impact vehicle prices and consumer affordability. Furthermore, many consumers are purchasing and financing more expensive vehicles, such as SUVs and hybrids.

Headwinds such as rising interest rates and fuel prices could also further impact auto affordability. Despite these potential challenges, TransUnion believes other macroeconomic factors such as low unemployment and an increase in GDP will continue to drive origination growth while keeping the average delinquency rate relatively low.

The number of auto loan originations is expected to end 2018 at 28.5 million and grow to 29.4 million in 2019. This is a significant increase from recent years (27.5 million in 2017, 28.3 million in 2016, 28 million in 2015). This growth is expected to be driven from both ends of the risk spectrum. Yet as the growth continues, the serious delinquency rate is anticipated to remain muted, ticking up to 1.44 percent in Q4 2019, an increase from the expected 1.43 percent in Q4 2018 and the 1.43 percent mark observed in Q4 2017.

Last modified on Sunday, 30 December 2018 21:05

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