Delinquencies Rise on Both Quarterly and Yearly Basis, TransUnion Reports
According to TransUnion, the auto loan delinquency rate increased to 1.04 percent in the third quarter. However, the delinquency rate is still well below the third quarter average observed between 2007 and 2013.
CHICAGO — The auto loan delinquency rate increased to 1.04 percent in the third quarter of 2013, up from 0.87 percent in the second quarter 2013 and 1 percent in the year-ago quarter, according to a report from TransUnion. The delinquency rate, however, is still well below the third quarter average of 1.22 percent observed between 2007 and 2013.
The report also found that auto loan debt per borrower increased for the tenth straight quarter, rising 4.7 percent from $15,943 in the third quarter 2012 to $16,685. On a quarterly basis, auto loan debt increased from $16,410 in the second quarter 2013.
The subprime delinquency rate increased from 5.30 percent in the year-ago quarter to 5.60 percent. Despite the increase, the delinquency rate for the credit segment remains near levels observed in recent third quarters: 5.45 percent in the third quarter 2011, 5.82 percent in the third quarter 2010 and 6.59 percent in the third quarter 2009.
"The auto loan story continues to be a positive one with relatively low delinquency rates and increased auto loan balances," said Pete Turek, vice president of automotive in TransUnion's financial services business unit. "Auto loan originations also are increasing as the demand for both new and used autos remains strong. While subprime delinquency levels are rising, they still remain at manageable levels."
TransUnion also reported that new account originations increased to 6.55 million in the second quarter, up from 5.89 million in the year-ago quarter. This level is the highest observed for a second quarter since TransUnion began tracking it in 2007. The share of nonprime originations grew by 56 basis points from 32.62 percent in the year-ago quarter. This percentage is still much lower than what was observed prerecession (38.04 percent in the second quarter 2007).
TransUnion recorded 59.5 million auto loan accounts as of the third quarter, up from 56.2 million in year-ago period. "This number is now approaching prerecession levels, and we believe there may be more room for it to rise," Turek added.
Rates in 15 states remained flat or declined in the third quarter compared to a year ago. The largest delinquency declines occurred in Oregon, South Dakota and California. The largest increases occurred in Alaska, Michigan and West Virginia. Auto loan balances rose in every state except Michigan, which experienced a 0.3 percent decline from the year-ago period.
TransUnion is forecasting auto loan delinquencies to rise slightly in the fourth quarter because of historic seasonality associated with auto financing.
"Auto loan delinquencies generally rise in the fourth quarter as consumers place higher priority on other consumer goods during the holiday shopping season" Turek said.
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