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TransUnion's analysis of data on new auto loans lags by a quarter, so the most recent figures are for the second quarter. Nearly 33 percent of new auto loans issued in the April-to-June period were made to nonprime borrowers, up from 30.2 percent a year earlier. Non-prime borrowers are defined as those with a score between 501 and 700 on the VantageScore credit scale, which runs between 501 and 990, with borrowers scoring at 900 or above being considered prime borrowers, or the safest credit bet. The portion of all auto loans that went to nonprime borrowers in the second quarter was up 27.5 percent from the same period two years earlier. In all, new auto loans and leases grew by 16 percent in the second quarter from a year earlier, TransUnion said. The average balance of new auto loans also increased on an annual basis in the second quarter, rising 2.4 percent to $17,829. Given the rise in auto loans going to higher-risk borrowers and the uptick in average balances, it's plausible that the auto-loan delinquency rate could inch up in the fourth quarter, Turek noted. "However, as the economy continues to improve and new and used auto demand maintains its current pace, we believe that the auto-loan delinquency rate will either remain the same or even drop a few basis points by the end of the year," he said.
[Associated
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