06:02 AM

TransUnion: Auto Loan Delinquency Rate and Debt Drive Higher in Q2

CHICAGO, IL--(Marketwired - Sep 9, 2014) - Auto loan delinquency rates increased more than 9% in Q2 2014 versus the same period last year while auto loan debt rose for the 13th straight quarter at the midpoint of 2014. The latest TransUnion auto loan report also found that both delinquency rates and debt levels rose for all age groups during Q2 2014.

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 delinquency rate (the ratio of borrowers 60 days or more delinquent on their auto loans) increased to 0.95% in Q2 2014, up from 0.87% in Q2 2013. However, auto loan delinquencies dropped on a quarterly basis from 1.00% in Q1 2014.

The delinquency rate remains below the Q2 average of 1.05% observed between 2007 and 2014. Since 2007, the auto loan delinquency rate has reached as high as 1.59% in Q4 2008 while its low was observed in Q2 2012 at 0.86%.

"Auto lending remains similar to what we have observed during the last several quarters," said Peter Turek, automotive vice president for TransUnion. "Delinquency rates remain relatively low while auto loan balances keep rising -- both metrics aided by increasing auto loan originations.

"In fact, there are four million more auto loan accounts in the marketplace than we observed just last year. This means with more auto loans in the marketplace and a delinquency rate ticking higher, we now have several thousand more delinquent accounts than at the midpoint of 2013."

All but six states experienced an increase in their auto loan delinquency rates between Q2 2013 and Q2 2014. The largest delinquency increases occurred in Alaska, Michigan, Montana and Nebraska. The largest declines occurred in Hawaii, South Dakota and Oregon.

TransUnion's analysis also found that auto loan delinquency rates increased across all age groups.

60+ Day Auto Loan Delinquency Rates for Various Age Groups
Age Range Q2 2013 Q2 2014 PCT. Change
Under 30 1.07% 1.28% 19.09%
30-39 1.13% 1.29% 13.70%
40-49 1.02% 1.15% 12.77%
50-59 0.70% 0.78% 10.87%
60+ 0.47% 0.53% 11.65%

Auto loan debt per borrower jumped 4.1% from $16,410 in Q2 2013 to $17,090 in Q2 2014. On a quarterly basis, auto loan debt increased 1.35% from $16,862 in Q1 2014. Auto loan balances rose in every state between Q2 2013 and Q2 2014. Among the largest U.S. cities, Houston and Phoenix saw the largest yearly auto loan debt rises of approximately 6%. Houston's average auto loan debt increased to $21,690, the highest such number of all major markets.

Auto loan debt increases for different age groups remained in a tight range, though changes observed for borrowers ages 40-49 were noteworthy. These borrowers saw the largest yearly percentage increase -- up more than 5% -- while also having an average auto loan debt level nearly $1,000 higher than the next age group.

Average Auto Loan Balances for Various Age Groups
Age Range Q2 2013 Q2 2014 PCT. Change
Under 30 $14,263 $14,777 3.60%
30-39 $17,194 $17,849 3.81%
40-49 $17,903 $18,840 5.24%
50-59 $16,840 $17,673 4.94%
60+ $15,107 $15,707 3.97%

TransUnion recorded 62.3 million auto loan accounts as of Q2 2014, up from 58.2 million in Q2 2013. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased to 6.20 million in Q1 2014, up from 5.82 million in Q1 2013.

The subprime delinquency rate (those consumers with a VantageScore® 2.0 credit score lower than 641 on a scale of 501-990) increased from 4.12% in Q2 2013 to 4.61% in Q2 2014. 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 33.80% in Q1 2013 to 34.36% in Q1 2014). This percentage is still lower than what was observed seven years ago near the beginning of the recession (38.98% in Q1 2007).

"It will be interesting to see if lending to the subprime segment of the population continues to grow and what, if any, the impact will be on the overall delinquency rate," said Turek. "Historically, increased subprime lending pushes the overall delinquency rate higher. This is not necessarily a bad thing for the auto ecosystem -- consumers find reliable transportation for work, lenders actively minimize the risk, and dealers sell more cars."

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. To subscribe to TransUnion news releases, please click here.

Q2 2014 Auto Loan Statistics - Consumer-Level Delinquency Rates

Quarter over Quarter Q1 2014 Q2 2014 Pct. Change
USA 1.00% 0.95% (5.0%)

Year over year Q2 2013 Q2 2014 Pct. Change
USA 0.87% 0.95% 9.2%

Auto Loan Consumer Delinquency Rates for Select States Q2 2014 
California 0.71%
Florida 0.92%
Illinois 1.02%
New York 0.74%
Texas 1.13%

Largest Year-over-Year Increases   Q2 2013  Q2 2014  Pct. Change 
Alaska 0.58% 0.74% 27.6%
Michigan 0.87% 1.08% 24.1%
Montana 0.58% 0.72% 24.1%
Nebraska 0.58% 0.72% 24.1%

Largest Year-over-Year Declines Q2 2013 Q2 2014 Pct. Change
Hawaii 0.69% 0.66% (4.3%)
South Dakota 0.65% 0.63% (3.1%)
Oregon 0.51% 0.50% (2.0%)

Q2 2014 Auto Loan Statistics - Auto Loan Debt Per Borrower

Quarter over Quarter Q1 2014 Q2 2014 Pct. Change
USA $16,862 $17,090 1.4%

Year over year Q2 2013 Q2 2014 Pct. Change
USA $16,410 $17,090 4.1%

Auto Loan Debt per Borrower for Select States Q2 2014 
California $17,277
Florida $17,174
Illinois $16,557
New York $14,962
Texas $21,553

Largest Year-over-Year Increases Q2 2013 Q2 2014 Pct. Change
New Mexico $19,093 $20,382 6.7%
Arizona $17,628 $18,701 6.1%
Texas $20,318 $21,553 6.1%

Largest Year-over-Year Declines Q1 2013 Q1 2014 Pct. Change

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

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