Vehicle arrears increasing
Arrears on vehicle loans have risen for the fifth consecutive month to 4.8 per cent, the highest reported level since January 2021, according to credit bureau Centrix.
The company’s September credit indicator report shows the number of consumers missing payments for vehicle loans has increased as cost-of-living pressures persist.
It notes there are nearly 300,000 active vehicle loans across the country, with the number of deals growing by approximately six per cent per annum as new vehicle sales remained strong.
Nationwide, the average automotive loan size is $21,000, held by Kiwis with an average age of 41-years-old and with an average credit score of 687 out of a possible 1,000.
Centrix says in its report that 2.7 per cent of vehicle loans were at least 30 days past due, a figure which has been rising over the past five months.
Keith McLaughlin, managing director, says: “Unfortunately, it appears there’s a long way to go for many consumers and businesses who are still grappling with the impacts of inflation, the ongoing cost of living crisis, cost pressures and increased interest rates.
“Confidence has taken a hit as the global economy grapples with the ongoing situation, something that has been felt in New Zealand as well.”
Other key findings in the Centrix report, which was released on October 4, include buy-now, pay-later (BNPL) arrears hitting a three-year high of 9.3 per cent in August and the proportion of credit cards overdue being at record low levels.
McLaughlin, pictured, notes demand for personal loans has resurged as Kiwis look to fund spending and discretionary purchases are “on the chopping block”, with new BNPL enquiries down 27 per cent year-on-year in September 2022.
“In addition to decreased [BNPL] demand, arrears are also continuing to increase as Kiwis feel the pinch,” he adds.
“Many are choosing to focus on their mortgages – due to interest rate hikes – in order to keep their largest asset well and truly secure.
“While officially forecasts don’t point to a recession, it appears there are more challenging months ahead for New Zealanders.
“As always, it’s important for those at risk of missing repayments to talk to their bank or lenders as soon as possible to avoid long-term financial stress.”
