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TransUnion: Delinquency Rates to Flatten, Debt Per Borrower to Jump in 2013

December 20, 2012

CHICAGO — Although the debt total is expected to climb, delinquency rates will keep steady in 2013, according to TransUnion’s annual auto loan delinquency forecast.

Compared to estimates in the final quarter of 2012, the 60-day delinquency rate for auto loans will climb from 0.36 percent to 0.37 percent by the end of 2013.

Peter Turek, the credit bureau’s vice president of automotive, told F&I and Showroom the improved level of delinquent payments is the result of low interest rates and higher demand in automotive sales. “Together, that really sets the state of the industry,” he said.

60-Day National Auto Loan Delinquency Rate (Q4 2012 and Q4 2013 include projections)

Q4 2008

Q4 2009

Q4 2010

Q4 2011

Q4 2012

Q4 2013

0.86%

0.81%

0.59%

0.46%

0.36%

0.37%

 

Turek predicts that virtually all credit segments will see growth in the next year, particularly below prime. In the third quarter of 2011, TransUnion found close to 19.97 million borrowers with credit scores of less than 700 carried auto loan balances. For the same quarter this year, that number rose to 20.66 million in the same quarter this year.

“When you start looking at what’s happening in the nonprime area, it certainly is growing and expanding,” Turek said. And with a recovering economy and demand for new vehicles, the executive said prime will continue to hold its own, adding that 63 percent of loan originations last quarter were to prime customers with a score of 701 or higher.

The study also predicts that debt per borrower will once again rise next year, which Turek said will coincide with the bump in new- and used-car sales. He predicted that debt per borrower will spike from the estimated $13,689 in the fourth quarter 2012 to $14,133 in the last quarter of 2013.

Turek also said that the used-car market’s supply issues could get some help next year with lease contracts from 2009 set to expire. Turek isn’t certain that those vehicles will end up back on dealer lots, however.

60-Day Auto Loan Delinquency Projections for 2013

 

2011-2013                                           Q4 2011                     Q4 2012                         Q4 2013       

USA

0.46%

0.36%

0.37%

 

Highest Auto Loan Delinquency States                          Q4 2013

Mississippi

0.88%

Louisiana

0.88%

West Virginia

0.70%

 

Lowest Auto Loan Delinquency States                          Q4 2013

Montana

0.13%

Alaska

0.17%

Minnesota

0.23%

 

Note: Q4 2012 also is a projected number as the quarter has not yet ended.

 

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