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US Auto Loan Delinquency Rates Up Over 17 Percent in 3Q 2008

December 17, 2008

CHICAGO — The national 60-day auto delinquency rate increased between the second and third quarter of 2008 from 0.68 percent to 0.80 percent, while the year-over-year delinquency rate increased 15.9 percent in the third quarter, according to TransUnion's auto lending report for the third quarter 2008.

Auto loan delinquency was highest in Mississippi at 1.46 percent, followed by Louisiana at 1.41 percent. The lowest auto loan delinquency rates were found in Wyoming (0.29 percent), North Dakota (0.36 percent) and South Dakota (0.46 percent). The largest improvements in delinquency from the previous quarter were found in Wyoming (29 percent decrease from 0.41 percent) and South Dakota (16 percent decrease from 0.55 percent).

Average auto debt nationally decreased slightly in the third quarter from $12,869 to $12,861. Year-over-year auto debt increased 1.1 percent. The state with the largest auto debt burden was in Nevada at $15,773, followed by the District of Columbia at $15,433. The lowest average auto debt was in Nebraska at $10,944. The steepest increases in average auto debt as a percentage occurred in Iowa (3.2 percent growth), Nebraska (2.5 percent) and Wisconsin (2.2 percent), while Utah experienced the sharpest drop in average auto debt (-1.7 percent) followed by Nevada (-1.6 percent).

In addition to the seasonality effect of auto loan delinquency, the third quarter 60-day auto delinquency rate reflects the current lending environment. Both the availability of funding (liquidity crisis) in the market for auto loans and tighter lending standards have significantly decreased the number of auto loans in the market, resulting in higher delinquency rates as a ratio of all auto loans.

Thirty states experienced a lower year-over-year delinquency rate change compared to the 15.9 percent increase seen nationally overall. Eleven states reflected a decrease in the 60-day auto delinquency year-over-year in the third quarter of 2008.

"Our current forecasting models indicate that the national 60-day auto delinquency rate is expected to rise from a value of 0.80 percent in the third quarter of 2008 to 0.88 percent by the end of this year," said Peter Turek, automotive vice president in TransUnion's financial services group. "The overall economy, weak labor market and lower disposable income levels continue to negatively impact the consumer."

As for state projections, Mississippi (1.9 percent) is anticipated to experience the highest delinquency rate by fourth quarter 2009, while Wyoming (0.42 percent) should prove to have the lowest level of delinquency.

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