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TransUnion: Auto Loan Delinquencies Rise on Both Quarterly and Yearly Basis

CHICAGO, IL--(Marketwired - Nov 25, 2013) - The auto loan delinquency rate (the ratio of borrowers 60 days or more delinquent on their auto loans) increased to 1.04% in Q3 2013, up on both a quarterly and yearly basis (from 0.87% in Q2 2013 and 1.00% in Q3 2012). The delinquency rate, though, is well below the Q3 average of 1.22% observed between 2007 and 2013. 

Auto loan debt per borrower increased for the 10th straight quarter, moving up 4.7% from $15,943 in Q3 2012 to $16,685 in Q3 2013. On a quarterly basis, auto loan debt also increased from $16,410 in Q2 2013.

The data provided are gathered from TransUnion's proprietary Industry Insights Report (IIR), a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

"The auto loan story continues to be a positive one with relatively low delinquency rates and increased auto loan balances," said Pete Turek, vice president of automotive in TransUnion's financial services business unit. "Auto loan originations also are increasing as the demand for both new and used autos remains strong. While subprime delinquency levels are rising, they still remain at manageable levels."

The subprime delinquency rate (those consumers with a VantageScore® 2.0 credit score lower than 640 on a scale of 501-990) increased from 5.30% in Q3 2012 to 5.60% in Q3 2013. Despite the increase, the delinquency rate for this group remains near levels observed in recent third quarters: Q3 2011 - 5.45%; Q3 2010 - 5.82%; Q3 2009 - 6.59%.

Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased to 6.55 million in Q2 2013, up from 5.89 million in Q2 2012. This level is the highest observed for a second quarter since TransUnion began tracking it in 2007 through IIR. The share of non-prime, higher risk loan originations (with a VantageScore 2.0 credit score lower than 700) grew by 56 basis points (from 32.62% in Q2 2012 to 33.18% in Q2 2013). This percentage is still much lower than what was observed pre-recession (38.04% in Q2 2007).

TransUnion recorded 59.5 million auto loan accounts as of Q3 2013, up from 56.2 million in Q3 2012. "This number is now approaching pre-recession levels, and we believe there may be more room for it to rise," added Turek.

Only 15 states experienced either a decline or had their auto loan delinquency rates remain flat between Q3 2012 and Q3 2013. The largest delinquency declines occurred in Oregon, South Dakota and California. The largest increases occurred in Alaska, Michigan and West Virginia. Auto loan balances rose in every state except Michigan, which experienced a 0.3% decline between Q3 2012 and Q3 2013.

TransUnion is forecasting auto loan delinquencies to rise slightly in the fourth quarter because of historic seasonality associated with auto financing. "Auto loan delinquencies generally rise in the fourth quarter as consumers place higher priority on other consumer goods during the holiday shopping season."

TransUnion's forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and others. The forecast would change if there were unanticipated shocks to the economy.

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. TransUnion's previous quarterly reports utilized the company's Trend Data database, which consisted of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. The latest reports now include nearly all active credit consumers. 

Q3 2013 Auto Loan Statistics - Consumer-Level Delinquency Rates

Quarter over Quarter 

   Q2 2013  Q3 2013  Pct. Change
USA 0.87% 1.04% 19.5%

Year over year 

   Q3 2012  Q3 2013  Pct. Change
USA 1.00% 1.04% 4.00%

Auto Loan Consumer Delinquency Rates for Select States

   Q3 2013
California 0.79%
Florida 1.04%
Illinois 1.16%
New York 0.79%
Texas 1.25%

Largest Year-over-Year Increases 

   Q3 2012  Q3 2013  Pct. Change
Alaska 0.58% 0.72% 24.1%
Michigan 0.90% 1.09% 21.1%
West Virginia 0.99% 1.17% 18.2%

Largest Year-over-Year Declines 

   Q3 2012  Q3 2013  Pct. Change
Oregon 0.65% 0.57% (12.3%)
South Dakota 0.78% 0.72% (7.7%)
California 0.84% 0.79% (6.0%)

Q3 2013 Auto Loan Statistics - Auto Loan Debt Per Borrower

Quarter over Quarter 

   Q2 2013  Q3 2013  Pct. Change
USA $16,410 $16,685 1.7%

Year over year 

   Q3 2012  Q3 2013  Pct. Change
USA $15,943 $16,685 4.7%

Auto Loan Debt per Borrower for Select States 

   Q3 2013
California $16,788
Florida $16,608
Illinois $16,128
New York $14,801
Texas $20,880

Largest Year-over-Year Increases 

   Q3 2012  Q3 2013  Pct. Change
Texas $19,420 $20,880 7.5%
Louisiana $18,415 $19,756 7.3%
Oklahoma $18,227 $19,520 7.1%

Largest Year-over-Year Declines 

   Q3 2012  Q3 2013  Pct. Change
Michigan $13,353 $13,319 (0.3%)

About TransUnion

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 33 countries around the world on five continents. www.transunion.com/business