National Auto Loan Delinquency Rate Hits Lowest Level Since TransUnion Began Monitoring

According to TransUnion’s quarterly analysis of trends in the auto industry, the national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) reached its lowest level since TransUnion began tracking the variable in 1999. For the first quarter of 2011, it stood at 0.49 percent.

On a national level, auto loan delinquencies fell 17 percent quarter over quarter (4Q10: 0.59 percent) and 25.8 percent year over year (1Q10: 0.66 percent)

“Continued improvement in auto delinquencies is a reflection of the stronger auto sales market. As consumers’ confidence in the economy improves, and with auto loan rates remaining at relatively low levels, more people are making auto purchases.  Add to that the fact that consumers with auto loans are making timely payments and we are seeing delinquency rates at record low levels,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit.  “Due to these record low levels and the competitive landscape of the industry, auto lenders are now shifting their attention to marketing and growth strategies.”

Q1 2011 Auto Loan Statistics

Auto Originations

• Year-over-year, national auto originations increased by 22 percent – marking the fifth consecutive quarter of growth.
• Demand for auto loans, measured by TransUnion’s Auto Inquiry Index, increased by 14.0 percent over the previous year. Forty eight states experienced an increase in their Auto Inquiry Index when compared to the previous year, while Hawaii, the District of Columbia and Tennessee experienced a decrease.
• States with the steepest quarterly increases in their Auto Inquiry Index were Washington (54.6 percent increase), Alaska (50.0 percent increase) and Vermont (43.9 percent increase).

Auto Delinquency Rates

• On a state-level basis, 46 states experienced a drop in their quarter-to-quarter delinquency rates, while only two states showed an increase on a year-over-year basis.
• Auto loan delinquency was highest in Mississippi and Louisiana at 0.97 percent and 0.90 percent, respectively. The lowest auto loan delinquency rates were found in Montana (0.21 percent), the District of Columbia (0.24 percent) and Wyoming (0.27 percent).
• Largest improvements in delinquency from the previous quarter were found in the District of Columbia (67.6 percent decrease) and Montana (48.8 percent decrease).
• Auto loan delinquency rates rose in only three states since the fourth quarter of 2010. Alaska increased to 0.61 percent (48.8 percent increase), North Dakota increased to 0.30 percent (25.0 percent increase), and Maine increased to 0.61 percent (17.3 percent increase).

Auto Debt Per Borrower

• On a national basis, average auto debt per borrower fell slightly quarter over quarter from $12,602 to $12,585. Year-over-year, auto debt edged up by 0.67 percent in the first quarter of 2011.
• Borrowers residing within the District of Columbia hold the largest average auto debt burden at $16,268, followed by Hawaii at $14,281. The lowest average auto debt per borrower was in Nebraska at $11,096.
• States with the steepest quarterly increases in average auto debt on a percentage basis were the District of Columbia (3.7 percent increase), North Dakota (2.5 percent increase) and Montana (2.5 percent increase).  Delaware experienced the sharpest drop in average auto debt (2.3 percent decrease), followed by New Mexico (2.1 percent decrease).

“TransUnion’s forecasting models have performed well in tracking the national and state 60-day auto delinquency rates, which are driven by economic factors such as per capita disposable income, consumer confidence, unemployment rates, and demand for motor vehicles,” said Turek. “Despite the current improving economic cycle, the seasonal ups and downs of auto loan delinquency rates – common in the industry – should continue throughout 2011. Because of improving employment and consumer confidence our forecast for the last quarter of 2011 suggests that the auto delinquency rate will continue to improve, declining between 15 to 20 percent from today’s rate.”

Q1 2011 Overview of U.S. Consumer Credit Status

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) decreased for the fifth consecutive quarter, dropping to 6.19 percent at the end of the first quarter in 2011. As housing prices declined further during the first quarter of 2011, mortgage delinquencies were expected to remain flat or slow in their decline. However, the Q1 2011 TransUnion data shows the mortgage delinquency rate improved more in this quarter (down 3.4 percent vs. Q4 2010) than it improved last quarter (down only 0.5 percent from Q3 2010).

The average national mortgage debt per borrower increased (0.6 percent) to $190,115 from the previous quarter’s $189,046. On a year-over-year basis, the first quarter 2011 average represents a 1.4 percent decrease over the first quarter 2010 level of $192,774.

TransUnion’s quarterly analysis of trends in the credit card industry revealed that the national credit card delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bank-issued credit cards) decreased to 0.74 percent in the first quarter of 2011. This delinquency rate is down almost 10 percent quarter over quarter (0.82 percent 4Q10) and down nearly 33 percent year over year (1.11 percent 1Q10).  This is the lowest level reached since the third quarter of 1996 (0.76 percent).

In the first quarter of 2011, the average credit card debt per borrower (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) fell by 5.8 percent to $4,679 from the previous quarter’s average of $4,965. This is the lowest average since the third quarter of 2000 ($4,695) and is markedly lower than the peak experienced during the recession ($5,776 1Q 2009).

The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data available on TransUnion’s Web site. Information for this analysis is culled from TransUnion’s Trend Data and the anonymous credit files of approximately 10 percent of credit-active U.S. consumers, providing a real-life perspective on how they are managing their credit health.

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 25 countries on five continents.