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National Delinquency Rate Declines Nearly 20 Percent in 2Q

August 30, 2010

The national 60-day auto delinquency rate fell 19.7 percent between the first and second quarters of 2010 to 0.53 percent, according to a TransUnion quarterly analysis of auto finance trends.

"The national trend we are seeing continues to point to a clear improvement in payment behavior. Although part of the reason for the turnaround in delinquency rates is the influx of new, lower risk loans as we have noted before, consumers do not see a quick fix to the short term economic and employment situation and are focusing their attention instead on savings and lower consumption of discretionary goods,” said Peter Turek, automotive vice president in TransUnion's financial services group.

Consumers’ fiscal responsibility helped contribute to the decline of the year-over-year national delinquency rate, which fell by 27.4 percent in the second quarter — the largest decline in the delinquency rate since the summer of 2011.

On a state-level basis, 46 states experienced a drop in their quarter-to-quarter delinquency rates, while only three states showed an increase on a year-over-year basis.

Quarterly Auto Statistics

Auto loan delinquency was highest in Mississippi and Louisiana at 1.05 percent and 0.97 percent, respectively. The lowest auto loan delinquency rates were found in North Dakota (0.28 percent), Michigan (0.29 percent) and Pennsylvania (0.32 percent).

The largest improvements in delinquency from the previous quarter were found in Vermont (41.4 percent decrease from 0.58 percent) and Connecticut (36.4 percent decrease from 0.55 percent).

Auto loan delinquency rates rose for only three states since the first quarter of 2010 – Rhode Island came in at 0.74 percent (a 29.8 percent increase), Utah at 0.71 percent (a 16.4 percent increase), and Montana at 0.38 percent (2.7 percent increase).

Average auto debt nationally rose quarter over quarter from $12,501 to $12,643. Year-over-year, auto debt increased by 1.13 percent in the second quarter.

The District of Columbia held the largest average auto debt burden at $15,625, followed by Wyoming at $14,534. The lowest average auto debt was in Nebraska at $11,118.

The regions with the steepest quarterly increases in average auto debt as a percentage were North Dakota (+5.1 percent), the District of Columbia (+4.8 percent) and South Dakota (+3.2 percent). New Jersey experienced the sharpest drop in average auto debt (-1.3 percent), followed by Nevada (-0.79 percent).

On a year-over-year basis, national bank auto originations increased by the largest margin since the recession began in late 2007 (18.7 percent). District of Columbia led all other areas showing an increase in auto originations by 55.4 percent since the second quarter 2009. On a regional basis, only one state (Hawaii) showed a drop in year-over-year originations.

Auto Delinquency Forecast

"Based on our current economic assumptions, TransUnion believes that the 60-day auto delinquency rate will continue to show seasonal patterns, but gradually drift upward, reaching a rate of around 0.6 percent by the fourth quarter of this yea," Turek said.

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