Autoremarqueting.com – Auto finance appears to be in a much better state than credit cards and personal loans based on TransUnion’s 2023 Consumer Credit Forecast released on Wednesday.
While experts are expecting delinquency rates for credit card and personal loans to rise to levels not seen since 2010, TransUnion is forecasting that serious auto finance delinquency rates are expected to decline modestly to 1.90% in 2023 from 1.95% in 2022.Meanwhile, the TransUnion forecast also includes a positive upward projection.
After an anticipated decrease of 5.9% through the end of 2022, analysts said auto originations are expected to rebound in 2023, with an increase of 4.6% year-over-year.
TransUnion said most of this growth is expected to occur in the second half of the year with growth of at least 6% expected across all risk tiers in Q4 2023.
Experts elaborated that auto delinquency is expected to peak in Q4 2022 before leveling off in 2023. The percentage of contract holders 60 days past or more due is expected to climb to 1.95% in Q4 2022 and is expected to drop further until finishing 2023 at 1.90%.
“Consumer demand for vehicles is likely to remain strong, and an expected improvement in inventory shortfalls should drive an increase in auto originations over the course of the year,” said Satyan Merchant, senior vice president and auto business leader at TransUnion.
“Auto delinquency, spurred by affordability challenges and the possibility of weaker employment, is expected to increase through the end of 2022 before finishing 2023 five basis points lower than the previous year,” Merchant continued in a news release.