Car loan arrears hit six-year high

Demand for automotive loans has shown signs of picking up but the arrears on such deals have hit a three-year-high, according to the latest figures from Centrix.

Its most recent credit indicator report shows arrears on vehicle loans increased to six per cent of active credit accounts in July, which is up by 31 per cent year-on-year.

Despite a brief drop in vehicle loan demand after changes to the government’s clean car discount this year, Centrix notes activity in this sector improved in August and applications for vehicle loans are 19 per cent higher than they were a year ago.

Overall, consumer arrears increased to 11.7 per cent of the credit active population in July. The number of people behind on payments also rose to 426,000 compared with 410,000 in the month prior.

Centrix notes arrears levels are 7.5 per cent higher year-on-year ad the number of credit-active consumers in more than 90 days’ arrears increased from 2.6 per cent in June to 2.7 per cent in July.

Keith McLaughlin, managing director, says the cost-of-living crisis continues to linger and he predicts the remainder of 2023 will continue to be challenging for Kiwi households and businesses alike.