Pete Turek wasn’t surprised by his company’s report on fourth-quarter
2008 delinquency rates, which showed year-over-year increases. In fact, the
senior executive at TransUnion said the numbers are becoming more predictable.
Between the third and fourth quarters 2008, delinquencies
increased from 0.8 percent to 0.86 percent, according to data recently release
by TransUnion. Year-over-year, the delinquency rate increased 8.86 percent in the
fourth quarter.
Turek attributed the increases to several factors, such as
seasonal dependencies and the current lending environment. He also pointed to
the battered economy, mortgage crisis and the weak labor market as major
contributors.
“In reviewing the data, there’s no real surprises,” Turek
said. “Most people marked the beginning of recession at December 2007. From
December 2007 to the end of 2009, we’re looking at a 40 percent increase in the
number of delinquencies. We’ve already experienced more than half of that
increase through the fourth quarter [2008].”
Turek expects the delinquency rate to increase to 1.13
percent by the end of the year, a “highwater mark” for auto loan delinquencies.
While the predicted rate is a significant number, Turek
pointed out that 30 states and the District of Columbia
were below the national average
delinquency rate.
“It’s good for consumers. They’re very resilient and they’re
figuring out ways to stay current on their auto loans,” Turek said.
Ranking states by delinquency rates, the top 10 states with
the highest rates were those hit hardest by the mortgage crisis or are still
recovering from Hurricane Katrina. Mississippi
topped the list with a rate of 1.62 percent, followed by California at 1.46 percent.
Rounding out the list of troubled states were Louisiana, Alabama, Georgia, Florida,
Tennessee, Nevada,
Arizona and
Hawaii.
Additionally, TransUnion reported
that average auto debt nationally decreased slightly in the fourth quarter from
$12,861 to $12,713. Year-over-year auto debt also fell to 0.2 percent, which
Turek said wasn’t a surprise.
“That was expected that average
auto debt would go down. You heard about a lot of folks not buying autos or
lenders not making a lot of loans in the fourth quarter,” Turek said. “I would
not be surprised if average auto debt continues to go down.”