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Just Released: Subprime Auto Debt Grows Despite Rising Delinquencies

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Abstract

The latest Quarterly Report on Household Debt and Credit from the New York Fed's Center for Microeconomic Data showed a small increase in overall debt in the third quarter of 2016, bolstered by gains in non-housing debt. Mortgage balances continue to grow at a sluggish pace since the recession while auto loan balances are growing steadily. The rise in auto loans has been fueled by high levels of originations across the spectrum of creditworthiness, including subprime loans, which are disproportionately originated by auto finance companies. Disaggregating delinquency rates by credit score reveals signs of distress for loans issued to subprime borrowers—those with a credit score under 620. In this post we take a deeper dive into the observed growth in auto loan originations and delinquencies. This analysis and our Quarterly Report are based on the New York Fed's Consumer Credit Panel, a data set drawn from Equifax credit reports.

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  • Andrew F. Haughwout & Donghoon Lee & Joelle Scally & Wilbert Van der Klaauw, 2016. "Just Released: Subprime Auto Debt Grows Despite Rising Delinquencies," Liberty Street Economics 20161130, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87165
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    Keywords

    Auto Loans; Household Finance;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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