Bank Auto Loan Delinquencies Remain Low: Report

Delinquencies on U.S. automobile loans by banks increased in the fourth quarter of last year but remained low by historical standards, according to a new report.

The national auto delinquency rate for banks was 0.41%, the report from TransUnion stated. That's up from 0.38% in the third quarter of 2012, but down from 0.46% one year earlier. The delinquency rate measures the percentage of borrowers whose loans are at least 60 days past due.

"As expected, auto loan delinquencies rose slightly in the fourth quarter, though they remain near the all-time record low set in the second quarter of 2012," Peter Turek, automotive vice president in TransUnion's financial services business unit, said in a news release.

The states where banks saw the highest auto delinquencies in the fourth quarter were Mississippi, Louisiana and West Virginia. The Mountaineer State was also on the list of states that experienced the biggest one-year jumps in their rates, along with New Hampshire and Iowa.

Overall, 28 states saw an increase in bank auto delinquency rates between the third quarter of 2012 and the following quarter. But on a year-over-year basis, only 14 states experienced an increase, the report found.

TransUnion also found that the volume of auto loan originations by banks has increased, and so has the average loan size, while credit scores for borrowers have fallen.

Total new auto loan and lease originations by banks were up by 15.8% in the third quarter, the most recent period for which data was available, compared to the same period a year earlier. And average loan balances on newly originated auto loans increased by 1.66% over the same one-year period, according to the report.

Meanwhile, 32.4% of automobile buyers who took out loans from banks had credit scores below 700 in the third quarter of 2012. That was up from 30.6% in the third quarter of 2011, and up even more from the third quarter of 2010, when the comparable figure was 27.6%.

"We've been observing an increase in sub-prime borrowers in the auto loan space now for several quarters, and we do expect this will eventually push the overall delinquency numbers higher," Turek said.

But that's a long-term prediction. In the first quarter of 2013, TransUnion expects delinquencies on bank auto loans to remain near their current level.