The long-term effects of short-term economic stimulus money, in the form of direct payments to taxpayers, a moratorium on foreclosures and auto repossessions, and forgiveness of student debt, are still being felt in the auto loan segment and other consumer credit, according to a recent study by credit bureau TransUnion.

Economic stimulus related to pandemic recovery saw the household savings rate increase, and credit scores improve for U.S. borrowers. TransUnion published the study June 27.

Predictably, borrowers across the credit spectrum took advantage of their higher borrowing power to take on more debt, said Satyan Merchant, senior vice president of auto and mortgage line of business leader at TransUnion.

“The credit risk of the current population in the auto industry has changed,” Merchant said in a phone interview. “There’s been a significant amount of increase, of upward migration,” he said.

The upward migration of credit scores has been generally OK for borrowers who already had prime-risk credit scores before the stimulus, Merchant said.

But for borrowers in the subprime credit category, the longer-term effect of upward “migration” to a higher, less-risky credit tier is potentially an increase in delinquencies in auto loans and other forms of credit, the study said.

Auto-related debt has increased across the board. That’s due to a lot of factors besides stimulus money, especially high sticker prices and high interest rates, partly offset by an increase in discounting, analysts said.

According to TransUnion, in the first quarter of 2024, the average credit debt payment among auto borrowers was $581, up from $545 a year ago. At the start of the pandemic, in the first quarter of 2020, it was $487, which means an increase of 19% in four years.

On average, U.S. auto delinquencies 60 or more days past due have increased to 1.33% of the total in the first quarter of 2024, up from 1.19% in the first quarter of 2023, TransUnion said.

The study also found that consumers who saw the highest credit score “migration” increases in 2022, were at the greatest risk of falling 60-plus days past due, at least once in the following 15 months.

“The high migrators for sure have also taken on a higher amount of debt,” Merchant said.

TransUnion defines high migrators as those whose credit scores changed at least 46 points, in a period from three years to three months prior to the auto loan. Those high migrators accounted for a delinquency rate for 60-plus days past due of 4.36%, on auto loans that were originated in the third quarter of 2022, the study said.

Prior to the pandemic, for loans that were originated in the third quarter of 2018, high migrators in the analogous time frame accounted for a 60-plus delinquency rate of only 2.52%, TransUnion said.

Merchant said, “An entire generation hasn’t seen anything like this before.”