Car loan arrears improve

The demand for vehicle loans is increasing while arrears on such finance deals have dropped, according to the latest credit indicator report from Centrix.

The proportion of borrowers behind on automotive loans was 5.1 per cent in July, easing from 5.2 per cent in June and the lowest level so far in 2026. 

It was also down from 5.2 per cent in July last year.

Overall, consumer arrears edged higher in July to 10.74 per cent of the credit active population, up from 10.65 per cent in June.

Centrix says the number of people behind on payments increased by 4,000 to 424,000 in July.

“Despite the monthly increase, arrears are 13.4 per cent lower than a year ago,” the report adds. 

“The number of consumers 90 or more days behind has also continued to decline, falling to 82,000.”

The report states repayment performance continued to improve across most consumer lending products during July. 

Besides the improvement for vehicle loans, credit card arrears remained at 3.8 per cent, personal loan arrears held at 8.7 per cent and are five per cent lower year-on-year, while buy now, pay later arrears fell to seven per cent.

As for loan inquiries, the automotive sector had a 7.4 per cent year-on-year increase in demand through August.

Mortgage inquiries were also up 14.9 per cent over the same timeframe and interest for personal loans rose 6.2 per cent.

However, consumer credit demand was in decline by 7.3 per cent overall, “suggesting households remain cautious”.

Centrix’s report also says new household lending fell 10.5 per cent year-on-year in the July quarter, mostly because of a drop in mortgage activity.

In contrast, non-mortgage lending increased 4.9 per cent over the same period, supported primarily by continued growth in secured vehicle lending.