The total amount of outstanding auto loan balances in the U.S. has increased by 12 percent in this year's second quarter. As lenders create easier credit schemes, more and more consumers have shown willingness to enter long-term payment deals. These deals, which can average from 66 to 71 months, tend to bring greater risks for the consumer who would most likely end up being a delinquent payer. Some cases even went to a default, resulting in the repossession of the loaned vehicle.

According to the report for the second quarter by Experian Automotive, the 60-day delinquency had achieved a rate of 0.62 percent which is a seven percent increase from the same period in the previous year. Thirty-day delinquencies had also increased, albeit slightly, at 2.38 percent up to 2.39 percent.

Cases of repossession jumped to a rate of 70.2 percent. The bulk of the increase came from finance companies that are not run by credit unions, banks, or automakers. Despite of such increase, the percentage rate of auto loans which ended up in default comprises a mere 0.62 percent of all auto loans.

The report also revealed that the auto loan for the quarter has reached a total outstanding balance of a whopping $839.1 billion which is 11.7 percent higher compared to the previous year. While banks and lending companies may be lapping it all up, they should be reminded of the greater risk involved when interest rates would increase. When this happens, the number of delinquencies would definitely rise. Customers would more likely turn into leasing their cars instead of buying them.

Senior director of automotive finance Melinda Zabritski for Experian Automotive explains that the increasing number of delinquent loan payments and repossessions is "what we would expect as the auto industry sells more vehicles." She further adds that the increase, though it may seem slight, should be watched closely.

The increase in delinquent loans and repossessions have been heightened by borrowers whose credit scores are identified as subprime and deep subprime. Subprime borrowers have credit scores of 550 to 619, while deep subprime borrowers have credit scores that are not higher than 550. The two credit categories, when combined, would account for over twelve million of the Q2's open auto loans and make up 19.6 percent of all open auto loans.

"The number of subprime auto loans has definitely increased, but overall, those loans make up a smaller percentage of all auto loans than they did during the start of the recession in 2008 and 2009," adds Zabritski.