Vehicle arrears back on rise

The demand for vehicle loans is climbing but arrears are also on the up, according to the latest data from credit bureau Centrix.

The company’s credit indicator report for November shows year-on-year demand for vehicle loans was up 17.3 per cent during that month, with the appetite for personal loans also increasing 18.1 per cent.

At the same time, Centrix reveals arrears on vehicle loans rose in October to 4.7 per cent, the fifth increase in the space of six months. 

The figure followed a dip in September and pushed vehicle arrears close to the 4.8 per cent seen in August, which was the highest level since January 2021.

Keith McLaughlin, managing director of Centrix, says it seems increasingly likely consumers will face an “engineered recession to curb inflation and help settle the current economic climate” after the official cash rate was recently lifted to 4.25 per cent. 

“However, the present situation for many households across New Zealand appears to show the day-to-day struggle of inflation and the impacts on the cost of living,” he adds. 

“We saw arrears climb in October as people struggled to meet their repayment commitments across a range of credit products including vehicle and personal loans, telco and utility bills, and mortgages. 

“While arrears were climbing, demand for consumer credit also grew as Kiwis continue to turn to new avenues to make ends meet.” 

McLaughlin, pictured, says new consumer lending has climbed for the past three months and people are cutting back spending , which is also impacting retail businesses. 

“Looking forward, it seems likely Kiwis are in for some financially challenging months ahead. For those who are struggling to keep up with their payment obligations, it’s important to be proactive when it comes to planning – particularly over summer,” he notes.