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The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) rose between the second and third quarters of 2009 (from 0.73% to 0.81%), according to a Q3 analysis released today by TransUnion.com. The year-over-year delinquency rate at the national level increased by 1.25% in the quarter ended September 30.
"The rise in the third quarter 60-day auto delinquency rate is more indicative of a cyclical pattern since the current automotive lending environment has remained consistent in its approach over the last 12 months," says Peter Turek, automotive vice president in TransUnion's financial services group. "On a state-level basis, 7 states experienced a drop in their quarter-to-quarter delinquency rates while 22 showed a drop on a year-over-year basis. The drop in delinquency is an indicator that some states could emerge from the recession sooner than others."
"As in recent quarters, both the availability of funding in the market, consumer demand for auto financing and tighter lending standards have contributed to a significant decrease in the number of auto loans in the market, resulting in upward pressure on delinquency rates. As well, the drop in average auto loan debt, although marginal at the national level, reflects the maturation of existing loans and the corresponding decreases in new auto loan originations in the third quarter," adds Turek.
Mississippi and California at 1.53% and 1.33%, respectively, logged the highest auto loan delinquency rates. The lowest rates were found in the District of Columbia (0.26%), North Dakota (0.35%) and South Dakota (0.37%). The largest improvements in delinquency from the previous quarter were found in South Dakota (38.3% decrease from 0.60%) and the District of Columbia (38.1% decrease from 0.42%).
Average auto debt nationally continued to decrease slightly in the third quarter of 2009 from $12,560 to $12,542. Likewise, the year-over-year auto debt fell by 2.5%. The state with the largest auto debt burden was Nevada at $14,721 per auto borrower, followed by Texas at $14,425. The lowest average auto debt was in Nebraska at $10,770. The steepest annual increases in average auto debt as a percentage occurred in Michigan (+3%), Alaska (+2.17%) and Vermont (+2.03%), while the District of Columbia experienced the sharpest drop in average auto debt (-3.78%) followed by Wyoming (-3.15%).
"TransUnion's national 60-day auto delinquency rate forecast for the third quarter correctly predicted an increase, missing only by about 1%. TransUnion's forecasting models indicate that the national 60-day auto delinquency rate will rise to almost 0.9% by year-end, which is a 7.5% increase over the prior year," says Turek. "Although the effects of the government's various stimulus programs seem popular and the auto industry has reported an increase in sales during the quarter, the weak labor market should continue to negatively impact the consumer into 2010. As the new loans from the "clunkers" program show up on credit files, there is a good possibility average auto debt will increase. Since lenders had tightened their lending criteria prior to the "clunkers" program it also is expected the new loans will experience lower delinquencies."
Information for the overall analysis is culled quarterly from approximately 27 million anonymous, randomly sampled, individual credit files, representing approximately 10 percent of credit-active U.S. consumers and providing a real-life perspective on how they are managing their credit health.
