Chicago,
19
August
2015

TransUnion: Auto Loan Balances Grow as Delinquencies Continue Steady Decline

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infographic

The national auto loan delinquency rate (the ratio of borrowers 60 days or more delinquent on their auto loans) declined to its lowest level in two years, according to the latest auto report from TransUnion (NYSE:TRU). The auto delinquency rate dropped to 0.95% in Q2 2015, down 3.1% from 0.98% in Q2 2014. Auto delinquency rates were at the lowest level since Q2 2013, when delinquency rates dropped to 0.86%.

Subprime (those consumers with a VantageScore® 3.0 credit score lower than 601) delinquency rates also continued their steady decline in Q2 2015. Subprime delinquency rates fell to 4.98% in Q2 2015, a 1.6% year-over-year decline from 5.09% in Q2 2014. On a quarterly basis, delinquency rates for subprime consumers declined 4% from 5.19% in Q1 2015.

TransUnion found that nearly 72.5 million consumers have an auto loan or lease as of Q2 2015, with nearly one-fifth (18%) of those consumers in the subprime risk tier. Despite the 13.1 million subprime consumers with auto loans, subprime participation remains below the 23.7% level observed in Q3 2009 coming out of the Great Recession.

Jason Laky, senior vice president and automotive business leader for TransUnion
“Lenders are being prudent about re-entering the subprime lending market, and consumers are effectively managing their loans as delinquency rates remain stable. In today’s lending environment, we’re seeing consumers across all risk tiers take advantage of low rates. Super Prime consumers, typically a group with greater wherewithal to purchase their cars for cash, are also financing their cars with more frequency.”
Jason Laky, senior vice president and automotive business leader for TransUnion

Of the 72.5 million consumers with an auto loan or lease, 16.8 million belong to the Super Prime (those consumers with a VantageScore® 3.0 credit score 780 or higher) risk tier. More than 23.3% of all auto loans are held by Super Prime consumers, an 8.2% year-over-year increase from Q2 2014.

Viewed one quarter in arrears (to ensure the large majority of accounts are reported and included in the data), new auto loan originations increased 4.3% year-over-year to 6.5 million in Q1 2015, up from 6.2 million in Q1 2014. On a quarterly basis, auto originations increased 5.3% from 6.1 million in Q4 2014.

Auto loan debt per borrower grew 3.4% to $17,696 in Q2 2015. The growth moderated across all risk tiers on a year-over-year basis, with the slowest pace of growth since Q2 2012. “While growth rates have slowed progressively throughout the past two years, we are still in a high growth period,” said Laky. “Demand for auto loans was pent up during the Recession, and we’re seeing a return to a normal momentum.”

The youngest consumer group – those under age 30 – experienced growth in average balance for open auto trades in Q2 2015. Up from $14,778 in Q2 2014, the average balance was $15,200 in Q2 2015, an increase of $423. Nearly 831,000 more young consumers had an auto loan in Q2 2015 than in Q2 2015. Despite this increase, delinquency rates remained stable from Q2 2014 (1.27%) to Q2 2015 (1.28%).

Only two of the nation’s largest cities experienced an increase in auto loan delinquency in Q2 2015. Houston (up 5.4% from 1.11% in Q2 2014 to 1.17% in Q2 2015) and Washington D.C. (up 5.1% from 0.79% in Q2 2014 to 0.83% in Q2 2015) experienced rises, while Boston remained unchanged at 0.59% for both Q2 2014 and Q2 2015.

On a state level, delinquency rates in 33 states declined in Q2 2015. Oklahoma (down 17.2% from 1.66% in Q2 2014 to 1.37% in Q2 2015) and Illinois (down 11.9% from 1.01% in Q2 2014 to 0.89% in Q2 2015) experienced double-digit declines in their year-over-year delinquency. All states had an increase in auto loan debt per borrower in Q2 2015, with New Mexico (up 5.9% from $20,387 in Q2 2014 to $21,586 in Q2 2015) and Georgia (up 5.2% from $18,312 in Q2 2014 to $19,258 in Q2 2015) experiencing the largest rises.

“The auto loan market continues to be fueled by new account growth, higher balances financed and low delinquency rates,” said Laky. “We’re observing low delinquency rates in major U.S. cities and many states, indicating a positive lending environment.”

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Q2 2015 Auto Loan Statistics – Consumer-Level Delinquency Rates

Quarter over Quarter Q1 2015 Q2 2015 Pct. Change
USA 0.99% 0.95% (4.0%)
Year over Year Q2 2014 Q2 2015 Pct. Change
USA 0.98% 0.95% (3.1%)
Auto Loan Consumer Delinquency Rates for Select States Q2 2015
California 0.70%
Florida 0.88%
Illinois 0.89%
New York 0.72%
Texas  1.18%
Largest Year-over-Year Increases Q2 2014 Q2 2015 Pct. Change
South Dakota 0.62% 0.78% 25.5%
North Dakota 0.44% 0.54% 23.7%
Vermont 0.60% 0.66% 10.5%
Louisiana 1.77% 1.94% 9.5%
Largest Year-over-Year Declines Q2 2014 Q2 2015 Pct. Change
Oklahoma 1.66% 1.37% (17.2%)
Illinois 1.01% 0.89% (11.9%)
Alaska 0.74% 0.67% (9.9%)

 

Q2 2015 Auto Loan Statistics – Consumer-Level Delinquency Rates

Quarter over Quarter Q1 2015 Q2 2015 Pct. Change
USA $17,508 $17,696 1.1%
Year over Year Q2 2014 Q2 2015 Pct. Change
USA $17,108 $17,696 3.4%
Auto Loan Debt per Borrower for Select States Q2 2015
California $17,872
Florida $17,937
Illinois $17,216
New York $15,257
Texas $22,581
Largest Year-over-Year Increases Q2 2014 Q2 2015 Pct. Change
New Mexico $20,387 $21,586 5.9%
Georgia $18,312 $19,258 5.2%
Texas $21,558 $22,581 4.7%
Largest Year-over-Year Declines Q2 2014 Q2 2015 Pct. Change
*      

*No states experienced declines in their auto loan debt per borrower.

About TransUnion (NYSE:TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.com/business

Media Contacts
photo:Dave Blumberg
Dave Blumberg
Senior Director of Public Relations, U.S. & International
312-985-3059
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