TransUnion Identifies Areas with Highest Auto Loan Delinquency Rates, More
CHICAGO — TransUnion.com released an analysis of the auto loan market this morning. The company found that for the second quarter of this year the 60-day auto delinquency rate was up double digits compared to the prior year; however, this figure remained relatively flat when compared to the first quarter.
More specifically, the delinquency rate increased 11.5 percent from the second quarter of 2007 when it came in at 0.61 percent. Comparing the first quarter of this year with the second quarter, TransUnion indicated that this rate was up just slightly from 0.65 percent to 0.68 percent.
The delinquency rate was highest in the D.C. at 1.41 percent, followed by Mississippi at 1.25 percent.
The lowest rates were found in Alaska (0.22 percent), North Dakota (0.30 percent) and Wyoming (0.41 percent).
For the largest improvements in delinquency from the previous quarter, TransUnion pointed to Alaska (40 percent decrease from 0.37 percent), New Hampshire (35 percent decrease from 0.65 percent) and Wisconsin (18 percent decrease from 0.55 percent).
Throughout the nation, average auto debt grew in the second quarter to $12,869 from an median of $12,833 in the previous quarter. Year-over-year, auto debt increased 1.9 percent from an average of $12,630.
The largest state average was in Nevada at $16,033, followed by the D.C. at $15,369. At the other end of the spectrum, the lowest median auto debt was in Nebraska at $10,681.
Continuing on, TransUnion reported that the steepest climbs auto debt occurred in Maine (3.2 percent growth), North Dakota (2.9 percent) and West Virginia (2.4 percent), while Louisiana experienced the sharpest drop, down 1.6 percent, followed by New Hampshire, down 1.2 percent.
Explaining the findings, Peter Turek, automotive vice president for TransUnion's financial services group, said, "The availability of home equity for financing auto purchases has diminished significantly in states like Nevada and Arizona, thus contributing to higher overall average auto loan debt.
"While the statistics show a slight increase in 60-day delinquency rates, some states that in recent years have had some of the highest rates, like Louisiana and Alabama, have shown a decrease over the prior quarter, a possible indication of achieving economic stability in the aftermath of Hurricane Katrina," he continued.
Looking ahead, TransUnion officials said they expect a continued rise in average auto debt as consumers seek a solution to higher energy prices.
One such solution could involve consumers trading out of vehicles that have lost value or have lower payments for newer, more fuel-efficient cars, thereby leading to higher overall debt as the new-auto loans will be further from their respective payoff dates, the company noted.
"Our current forecasting models indicate that the national 60-day auto delinquency rate is expected to gradually rise from a value of 0.68 percent in the second quarter of 2008 to 0.85 percent by year end," Turek pointed out. "This increase is primarily attributed to seasonality effects in auto loan delinquency, trends in disposable income and a continued slowdown in the general economy."
As for state projections, TransUnion indicated that D.C. (1.6 percent) will experience the highest delinquency rate by fourth quarter 2008, while Alabama (0.28 percent) will show the lowest level of delinquency.
Reviewing the overall credit picture for U.S. consumers in the second quarter, the company found a few statistics of note and offered some forecasts for the mortgage and bank card sectors, which were as follows:
—The national average mortgage loan delinquency rate (the ratio of borrowers 60 or more days past due) increased for the sixth straight quarter, hitting a high of 3.53 percent for the second quarter. This statistic is up more than 9 percent from the previous quarter's 3.23 percent average. The year-over-year mortgage delinquency rate increased more than 50 percent.
—Mortgage borrower delinquency rates for the period were highest in Nevada (6.63 percent) and Florida (6.47 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.10 percent), South Dakota (1.50 percent) and Montana (1.54 percent).
—The national 60-day mortgage delinquency rate is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter to just over 4 percent by year-end.
—The national average credit card debt per credit card borrower increased 2.63 percent from the previous quarter's $1,673 total to $1,717. The year-over-year credit card debt increased 8.6 percent.
—The steepest increases in average credit card debt over the previous quarter occurred in the D.C. (6.62 percent), Alaska (4.84 percent) and Tennessee (4.75 percent).
—Nationally, the ratio of credit card borrowers delinquent on one or more of their credit cards declined to 1.04 percent in the second quarter of 2008, down 12.6 percent over the previous period. However, year-over-year the credit card delinquency rate increased 14.3 percent.
—Credit card delinquency was highest in Nevada (1.72 percent), followed closely by Florida (1.34 percent) and Mississippi (1.30 percent). The lowest credit card loan delinquency rates were found in North Dakota (0.59 percent), Vermont (0.68 percent) and Utah (0.70 percent).