SCHAUMBURG, Ill. — While vehicle affordability and delinquent loan volume continue to make headlines, new findings from Experian’s Q4 2018 State of the Automotive Finance Market report show these trends may not be as dire as they seem. Analysts found the percentage of 30-day delinquent loans improved year-over-year, while the percentage of 60-day delinquencies saw only a minimal uptick over the same time period.

The report shows 30-day delinquencies dropped to 2.32% from 2.36% a year ago, while 60-day delinquencies increased to 0.78% from 0.76% the previous year. The percentage of delinquent loans continues to remain stable even as more and more consumers rely on automotive financing: In Q4 2018, 85.1% of all new vehicle purchases were financed compared with 81.4% in Q4 2010.

“While delinquencies can be an indicator of automotive finance market health, it’s important to examine these trends within the larger industry context,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions and F&I and Showroom contributor. “With more car shoppers using automotive financing options, it’s natural to see an uptick in the volume of delinquent loans. Lenders need to factor in additional historical trends, such as the percentage of subprime loan originations and shifting payment options, to gain a more complete picture and make the right lending decisions.”

Much of the conversation surrounding delinquency rates is driven by questions of vehicle affordability, specifically the average loan amounts and monthly payments. The average loan amount for a new vehicle was $31,722 (up $623 from the previous year), while the average loan amount for a used vehicle surpassed $20,000 (up $488 from the previous year). The average monthly payment for a new vehicle was $545 (up $30 from the previous year) and the average for a used vehicle was $387 (up $16 from the previous year).

Another component of the conversation around vehicle affordability is interest rates, which for new vehicle loans was 6.13%, up from 5.11% a year ago. For used-vehicle loans, the average interest rate was 9.59%.

“As loan amounts, monthly payments, and interest rates continue to rise, there are a number of factors for consumers to consider as they research their car-buying options,” Zabritski said. “While consumers appear to be doing their due diligence when making borrowing choices that fit their budget, lenders also play a large role. Every consumer deserves access to quality credit, and lenders should leverage all available data to offer the most comprehensive financing options to car shoppers.”