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TransUnion: Auto Loan Delinquency Rate to Marginally Increase in 2015; Debt Levels to Continue Rising Trend

CHICAGO, IL--(Marketwired - Dec 16, 2014) - TransUnion's annual auto loan forecast calls for auto loan debt to continue to rise to $18,244 at the end of 2015. This would mark 19 consecutive quarters of increases since Q1 2011, when auto loan debt per borrower stood at $14,954.

The TransUnion forecast calls for the national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) to end 2014 at 1.20%, and increase slightly to 1.27% at the end of 2015.

"We expect the auto loan market to continue to perform exceptionally well in 2015, with more sales leading to continued increases in auto loan debt per borrower as the national portfolio gets younger on average," said Peter Turek, automotive vice president in TransUnion's financial services business unit. "We anticipate the economy to continue to improve next year, with a better employment picture helping the auto industry. While the auto loan delinquency rate has slowly risen to a point where it will be above 2010 levels, we are still far off the peaks observed in 2008 and 2009 when delinquencies were more than 30 basis points higher."

Since 2007, the auto loan delinquency rate has been as low as 0.86% in Q2 2012 and as high as 1.59% in Q4 2008. On average, the delinquency rate during the fourth quarter between 2007 and 2013 was 1.29%.

60-Day National Auto Loan Delinquency Rate (Q4 2014 and Q4 2015 include projections)

Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015

While delinquency levels for subprime borrowers have grown from 4.2% in Q3 2012 to 4.5% in Q3 2013 to 5.3% in Q3 2014, the contribution of this segment to the overall delinquency rate has been muted because their share has remained between 14% and 15% during this timeframe. Subprime share of balances had peaked in 2009 at just over 22%.

Looking further back, TransUnion data show the number of subprime borrower accounts are 1.6 million fewer in Q3 2014 versus Q3 2007 (pre-recession). Meanwhile the number of auto loan accounts rose approximately 4 million in that same timeframe.

"The auto loan market has been especially strong for lenders, as much of the growth observed in the last few years has come from prime or better risk tiers," said Turek. "There is room for growth in the subprime sector as evidenced by more competition. Prior to the recession the percent of subprime auto balances were nearly 5% higher than they are now."

On a state level, auto loan delinquency rates are expected to rise in 38 states with the largest increases occurring in Rhode Island (+11%), Colorado (+11%), Utah (+9%) and Florida (+7%). The biggest percentage declines are expected in Alaska (-5%), Wyoming (-3%) and Maryland (-2%). Auto loan debt is expected to rise in every state and the District of Columbia, with largest increases occurring in Michigan (+8%), Missouri (+7%), Georgia (+6%) and Arizona (+6%).

TransUnion's forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The forecasts would change if there were unanticipated shocks to the economy, such as if home prices unexpectedly fall. Better-than-expected improvements in the economy, such as precipitous drops in unemployment, could also impact these forecasts.

60-Day Auto Loan Delinquency Historical Data and Projections for 2015

2013-2015Q4 2013Q4 2014*Q4 2015
Highest Auto Loan Delinquency StatesQ4 2015
Lowest Auto Loan Delinquency StatesQ4 2015
North Dakota0.56%

  Note: Q4 2014 also is a projected number as the quarter has not yet ended.

Auto Loan Debt Per Borrower Historical Data and Projections for 2015

2012-2014Q4 2013Q4 2014Q4 2015
Highest Auto Loan Debt Per Borrower StatesQ4 2015
Lowest Auto Loan Debt Per Borrower StatesQ4 2015
Rhode Island$14,243
Note: Q4 2014 also is a projected number as the quarter has not yet ended.

TransUnion's Industry Insights Report
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.

About TransUnion
As a global leader in information and risk 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 high quality data, and integrating advanced analytics and enhanced decision-making capabilities. 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.