Vehicle loan arrears flat

The percentage of people behind on their vehicle loans fell during August to 5.9 per cent but the figure is unchanged from the same month of 2023, according to new figures from credit bureau Centrix.

The company’s latest credit indicator report also shows credit card arrears increased to 4.4 per cent in August, up from 4.2 per cent in the same period of last year, while the proportion of households behind on retail energy payments rose to 4.7 per cent.

Overall, the number of New Zealand consumers behind on payments rose slightly in August to 461,000, up 5,000 month-on-month, equal to 12.3 per cent of the credit active population.

Centrix says arrears are expected to rise during the late spring-early summer period in line with seasonal trends, although the number of consumers who are 30-plus days in arrears has improved by two per cent year-on-year. 

The report also shows non-mortgage new lending, which includes vehicle or personal loans, is down 14.2 per cent year-on-year.

It notes this reflects the significantly lower volume of new car sales compared with last year, especially those for electric vehicles. 

Keith McLaughlin, managing director of Centrix, says households are continuing to face challenges when it comes to credit arrears and repayments. 

“While overall arrear trends flatten out, this level is above pre-Covid levels and suggests the cost-of-living crisis is continuing to squeeze households,” he explains. 

“Financial hardship cases – an indicator of personal financial strife – have been rising overall since November 2022. 

“Although they are up 24 per cent year-on-year, which is reflective of the current tough economic environment across the country, it is positive to see consumers are taking sensible steps to protect and rectify their declining financial situations before they reach emergency state.”