Experian Automotive: Auto Delinquencies Climb by Double Digits
SCHAUMBURG, Ill. — This morning, Experian Automotive announced that 60-day past due climbed by double digits year-over-year from the fourth quarter of 2007 to 2008.
More specifically, the company discovered that these delinquencies are up nearly 17 percent.
Currently, 1.04 percent of all auto loans are 60 days past due, compared with 0.89 percent in the fourth quarter of 2007, according to the company. Meanwhile, 30-day delinquencies rose 9.87 percent over the same period to 3.06 percent in fourth quarter 2008 from 2.78 percent in fourth quarter 2007. When combined, 30- and 60-day delinquencies account for nearly $29 billion in at-risk loans.
"There continues to be a steep climb in the number of people past due on their auto loans, which causes a negative ripple through the industry," explained Scott Waldron, president of Experian Automotive.
"As more loans become delinquent, lenders begin to tighten their criteria for automotive lending. Ultimately, this makes it more challenging for consumers to find funding when they want to buy a car or truck and more difficult for dealers to help consumers secure financing," he noted.
According to Experian's Scorex PLUS, the average loan score for a new vehicle was 765 in the fourth quarter of 2008, 12 points higher than the average credit score for a new vehicle loan in the fourth quarter of 2007.
Although the median loan score for new loan originations rose, largely due to more stringent loan criteria from lenders, overall consumer credit worsened, Experian pointed out.
The percentage of all outstanding loans to prime customers (680 credit score and above) fell by nearly 1.5 percentage points, from 57.97 percent in the fourth quarter of 2007 to 56.5 percent in the fourth quarter of 2008.
"The overall drop in consumer credit, combined with lenders' tightening of loan criteria, is making it more difficult for auto retailers to find financing for their potential customers," said Melinda Zabritski, director of automotive credit for Experian Automotive.
"However, there are still financing sources out there if retailers know where to look. They need to develop a better understanding of lenders in their market and find out who has programs for various credit levels," she added.
Other findings:
—Delinquencies are highest in the Southeast, as Mississippi, Alabama, Georgia and South Carolina have four of the five highest 30-day delinquency rates. The District of Columbia is second.
—The states with the lowest 30-day delinquency rates are North Dakota, Arkansas, South Dakota, Montana and Wyoming.
—The average loan for a new vehicle was $24,444 in the fourth quarter of 2008, down $338 from the first quarter of 2008 ($24,782).
—The average loan for a used vehicle was $15,904 in the fourth quarter of 2008, down $678 from the first quarter of 2008 ($16,582).
—From the first quarter to the fourth quarter of 2008, small economy cars and entry-level SUVs saw significant increases in prime loan market share, up 29.4 percent and 24.2 percent, respectively. For the same time period, prime loans for full-sized pickup trucks and large SUVs saw decreases of 17.31 percent and 13.01 percent, respectively.