Arrears on vehicle loans climb

The percentage of people falling behind on their vehicle loans has hit its highest level since June 2020, according to new figures from credit bureau Centrix.

The company’s latest credit indicator report shows vehicle arrears rose to 5.3 per cent in December 2022, which it says is a key indicator of the financial pressure many consumers and households are currently facing.

This is the highest figure since the percentage of consumers behind on such loan repayments reached 6.2 per cent in June 2020. About a year ago it was only at 3.8 per cent.

Keith McLaughlin, managing director, adds arrears were up across the board and overall more than 400,000 Kiwis – or 11.3 per cent of the active credit population – were behind on repayments in December.

“A rise in vehicle arrears points to the challenges facing households, as this is usually one of the last credit repayments people let slip,” he explains.

“Additionally, Kiwi retailers are feeling the pinch as rising costs, employee turnover and overall reduced activity continues to bite at their bottom lines.”

McLaughlin advises anyone struggling to meet their repayment obligations to get in touch with their lender as soon as possible.

The Centrix data shows the overall number of New Zealand consumers in arrears on debt payments  was up 10 per cent year on year “as economic continues continue to deteriorate”.

December’s figures were also the highest level recorded since February 2021, when the figure stood at 11.4 per cent.

Buy now, pay later and credit card arrears have also risen and in December stood at 9.2 per cent and 4.5 per cent, respectively.

Meanwhile, Centrix notes the demand for automotive loans in January 2023 dropped 5.3 per cent when compared with the same month a year ago.