Lenders Put the Brakes on Auto Loan Delinquencies

Annual auto loan delinquency forecast predicts smoother sailing ahead.

December 15, 2011

Auto loan delinquencies—which have decreased markedly since the fourth quarter of 2008—will continue to fall during the first two quarters of 2012 before returning to current levels, according to TransUnion’s annual auto loan delinquency forecast.

Sixty-day auto loan delinquencies have fallen from 0.86% at year-end 2008 to 0.81% at year-end 2009, and 0.59% at year-end 2010. TransUnion expects this measure to decline to 0.51% at year-end 2011 and year-end 2012.

“Auto loans have performed quite well since the beginning of 2010 and we expect delinquencies to remain relatively low throughout 2012 as the gradual recovery in the economy will benefit both lenders and consumers,” says Peter Turek, automotive vice president in TransUnion's financial services business unit.

Highest Auto Delinquency States Year-end 2012
Mississippi 0.87%
Louisiana 0.87
Tennessee 0.80%
Lowest Auto Loan
Delinquency States
Year-end 2012
North Dakota 0.16%
Minnesota 0.24
Michigan/Montana 0.38%

“With auto loan originations increasing dramatically in the last few years, one cause for concern is that any dramatic economic pressures—like we experienced during the last recession—could elevate delinquency levels since missed payments often occur early on in the life of the loan,” he says.

Auto loan originations have greatly increased since the end of the recession in the second quarter of 2009, rising nearly 28% as of second-quarter 2011.

Quarterly originations are nearly 41% higher than the lowest levels observed during the recession in fourth-quarter 2008 and have risen about 8.4% in the last year.

Delinquencies should drop in 21 states by year-end 2012, while 29 states should experience increases. The largest yearly percentage auto delinquency declines are expected in Michigan (-14.54%), Rhode Island (-14.22%), and North Carolina (-14.54%).

The largest percentage increases are expected in North Dakota (72.47%), Alaska (25.43%), and Iowa (21.06%). Despite the large percentage increase in North Dakota’s auto delinquency rate, the state is still expected to have the nation’s lowest level at 0.16%.

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