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TransUnion released its annual national auto loan delinquency forecast indicating that the ratio of borrowers 60 or more days past due will remain near record-low levels throughout 2013.
TransUnion also forecasts that auto debt per borrower will continue its uptrend next year, jumping from an expected $13,689 in the fourth quarter of 2012 to $14,133 at the end of 2013, a sign that auto financing will continue to grow as new- and used-car sales increase.
Though the national auto loan delinquency rate is expected to rise slightly from 0.36 percent at the end of 2012 to 0.37 percent in the fourth quarter of 2013, the level has dropped more than 50 percent since reaching its peak in the fourth quarter 2008 at 0.86 percent.
Seventeen states are expected to see delinquencies drop or remain the same during 2013. However, 21 of the states are forecasted to experience auto loan delinquency increases of only 1 or 2 basis points. The largest yearly percentage auto delinquency declines are expected in Georgia (-13.04 percent), California (-7.50 percent) and Alaska (-5.56 percent). The largest percentage increases are expected in Hawaii (17.24 percent), Virginia (11.54 percent) and Nevada (11.11 percent).
The low auto loan delinquency environment has persisted even as more non-prime, higher-risk consumers carry auto loan balances. In Q3 2011, TransUnion's Industry Insights database found approximately 19.97 million borrowers with a VantageScore credit score lower than 700 (on a scale of 501-990) carried auto loan balances. This number increased to 20.66 million in Q3 2012.
The total number of consumers carrying auto loan balances also has increased in the last year, rising from 59.27 million in Q3 2011 to 61.68 million in Q3 2012. With this rise, auto loan debt per borrower jumped from $12,902 to $13,571 in those same periods. If TransUnion's 2013 forecast holds true, auto loan debt will have increased 11 straight quarters since Q1 2011. In the 11 quarters prior to Q1 2011, auto loan debt experienced only three quarterly increases.