TransUnion: Auto Loan Delinquency Rate Fell in Fourth Quarter Compared to Last Year

The rate of consumers 60 days or more past due on their auto loans showed no change between the third and fourth quarters of 2009, and is still less than one percent overall (0.81 percent), according to TransUnion’s quarterly analysis of auto industry trends. When compared to the same period a year ago, the auto loan delinquency rate decreased by 5.81 percent.

Mississippi (1.45%) and Alabama (1.39%) had the highest auto loan delinquency rates in the fourth quarter. The lowest auto loan delinquency rates were in Alaska (0.29 percent) and North Dakota (0.32 percent). The average amount financed, or average auto debt, for both new and used vehicles increased slightly between the third and fourth quarters of 2009 from $12,542 to $12,568.

Ford Edge

More consumers paid their car loans on-time in the fourth quarter, compared to a year ago.

"Going against traditional seasonal patterns, the flattening of auto delinquency rates in the fourth quarter may be an optimistic sign for payment behavior over the remainder of this year," said Peter Turek, automotive vice president in TransUnion’s financial services business unit, in a statement.

"Since 2000, auto delinquency rates have increased in the fourth quarter except for one occasion back in 2003. In fact, at the start of the recession (fourth quarter of 2007), the auto delinquency rate increased nearly 15 percent from the prior quarter. Part of the reason why we may be seeing a gradual turnaround in delinquency rates is the impact of new lower risk loans over the past several quarters including new loans from the popular government program, Cash for Clunkers."

TransUnion predicts the 60-day auto delinquency rate will be in the range of 0.75 and 0.80 percent by the end of 2010.

"Given a more positive outlook for GDP and other economic indicators except for employment, our current forecasting models point to a national 60-day auto delinquency rate of 0.65 percent by midyear, a decrease of 19.7 percent compared to fourth quarter 2009," Turek said. "However, the seasonality and forecast of car sales will influence delinquency throughout the rest of this year and into 2011."

The mortgage loan delinquency rate (60 days or more past due) hit an all-time national average high of 6.89 percent in the fourth quarter of 2009. The national credit card delinquency rate (90 days or more past due on one or more credit card) increased to 1.21 percent in the fourth quarter of 2009, up 10 percent over the previous quarter. Compared to mortgages and credit cards, auto loan debt is still seeing some of the lowest delinquency rates around.