As the year winds to a close, credit monitoring and scoring company TransUnion offered their auto loan predictions for 2016.
TransUnion expects that 2016 will be a strong year for auto finance, largely due to rising land and leases balances and low delinquency rates.
"With low default rates supported by a robust job market, low interest rates and consumer confidence auto lenders are feeling confident about extending credit to more borrowers," the company wrote on its blog.
The average loan and lease balance should climb to $18,509 by the end of next year, up from an estimated $17,985 in the fourth quarter of 2015.
Speaking with Automotive News, TransUnion senior vice president and automotive business leader Jason Laky said that consumer confidence is on the rise. There is also an increased number of consumers taking out loans rather than retiring old ones due to beneficial interest rates.
"Coming out of the recession, more lenders are getting back into lending and have slowly expanded underwriting criteria to provide loans to more people," Laky said. "As long as the economy is expanding and auto sales are going up, auto balances are going to increase."
This should cause outstanding balances to rise, but Laky expects delinquency rates to hold steady. TransUnion projects a 60 day delinquency rate for the fourth quarters of both 2015 and 2016 to be 1.11 percent, down five basis points from the same quarter of 2014.
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