Record Defaults in Brazil Halt Growth in Auto Loans

Auto lending in Brazil was flat last year as bankers restricted loan availability because defaults reached all-time highs, Dow Jones Newswires reports.

The amount of outstanding auto debt stood at 201.6 billion reals ($102.9 billion) at the end of 2012, almost unchanged from a year earlier.

After defaults peaked at 6.2% of total car loans in May, lenders tightened credit standards to make it harder for consumers with low credit scores to obtain financing, according to automotive lender group ANEF. By year-end the default rate had dropped to 5.3%.

That rate could fall to as low as 3% this year, ANEF predicts. The group expects auto-loan volume to climb 8% to 271.7 billion reals ($138.7 billion) in 2013.