Auto loan delinquency rates rose more than 9% in the second quarter ended June 30 versus the same period last year while auto loan debts rose for the 13th straight quarter, according to TransUnion.

The latest TransUnion auto loan report also found that both delinquency rates and debt levels rose for all age groups in Q2. 

“Auto lending remains similar to what we have observed during the last several quarters,” said Peter Turek, automotive vice president for TransUnion. “Delinquency rates remain relatively low while auto loan balances keep rising, both metrics aided by increasing auto loan originations."

The auto loan delinquency rate (the ratio of borrowers 60 days or more delinquent on their auto loans) increased to 0.95% in the second quarter, up from 0.87% in Q2 2013. However, auto loan delinquencies dropped on a quarterly basis from 1.00% in this year's first quarter.

The delinquency rate remains below the Q2 average of 1.05% observed between 2007 and 2014. Since 2007, the auto loan delinquency rate has reached as high as 1.59% in Q4 2008 while its low of 0.86% was observed in Q2 2012.

"T here are four million more auto loan accounts in the marketplace than we observed just last year," Turek added. "This means with more auto loans in the marketplace and a delinquency rate ticking higher, we now have several thousand more delinquent accounts than at the midpoint of 2013."

All but six states saw an increase in auto loan delinquency rates between Q2 2013 and the second quarter this year. The largest delinquency increases occurred in Alaska, Michigan, Montana and Nebraska. The largest declines occurred in Hawaii, South Dakota and Oregon.

TransUnion’s analysis also found that auto loan delinquency rates increased across all age groups. 
The data provided are gathered from TransUnion's Industry Insights Report (IIR), a quarterly report on data and trends in the consumer lending industry. The report is based on anonymized credit data from nearly every credit-active consumer in the U.S. 

The report shows that auto loan debt per borrower in Q2 jumped 4.1% from $16,410 last year to $17,090 this year. Auto loan debt increased 1.35% from $16,862 in Q1.

Auto loan balances rose in every state in a Q2 comparison. Among the largest cities, Houston and Phoenix saw the largest yearly auto loan debt rises of approximately 6%. Houston’s average auto loan debt increased to $21,690, the highest such number of all major markets. 

Auto loan debt increases for different age groups remained in a tight range, though changes observed for borrowers ages 40-49 were noteworthy. Those borrowers saw the largest yearly percentage increase – up more than 5% – while also having an average auto loan debt level nearly $1,000 higher than the next age group.
TransUnion recorded 62.3 million auto loan accounts as of Q2, up from 58.2 million a year earlier.
The subprime delinquency rate (those consumers with a VantageScore 2.0 credit score lower than 641 on a scale of 501-990) rose from 4.12% in the second quarter a year ago to 4.61%. 

"It will be interesting to see if lending to the subprime segment of the population continues to grow and what, if any, the impact will be on the overall delinquency rate," said Turek. "Historically, increased subprime lending pushes the overall delinquency rate higher. This is not necessarily a bad thing for the auto ecosystem – consumers find reliable transportation for work, lenders actively minimize the risk and dealers sell more cars."
 


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