The ratio of borrowers that are 60 more days past due on their auto loans continue to remain at near historic low levels.
According to TransUnion, the national auto loan delinquency rate ended 2012 at 0.41%. While the delinquency rate rose from 0.38% in third quarter of 2012, it dropped five basis points from the end of 2011 when the delinquency rate was 0.46%.
Twenty-eight states experienced increases in their auto delinquency rates, between Q3 2012 and Q4 2012, TransUnion's data showed. However, on a year-over-year basis only 14 states experienced increases in their auto delinquency rates. On a more granular level, 52.5% of metropolitan areas saw decreases in their auto delinquency rates between Q4 2011 and Q4 2012.
“As expected auto loan delinquencies rose slightly in the fourth quarter, though they remain near the all-time record low set in the second quarter of 2012,” said Peter Turek, automotive vice president in TransUnion's financial services business unit. “We continue to see increasing auto debt per borrower as the new and used car sales market remains relatively strong.”
TransUnion's analysis also found that auto loan originations continued to increase. Total new auto loan and lease originations in Q3 2012 grew by approximately 15.8% relative to the same period last year. Auto loan originations are analyzed one quarter in arrears, to account for the reporting lag of new accounts, according to TransUnion.
Meanwhile, the share of non-prime, higher-risk consumers, defined as those with a VantageScore credit score lower than 700 on a scale of 501-990, was 32.4%. This is somewhat higher than one year ago (30.6% in Q3 2011), and is significantly higher than the 27.6% observed in Q3 2010, TransUnion said.
In volume terms, the number of new accounts originated to non-prime consumers increased 20.5% in Q3 2012 compared to Q3 2011, according to TransUnion. In addition, average balances for the newly originated auto loans increased by 1.66% in Q3 2012 relative to the same period last year, from $18,028 in Q3 2011 to $18,326 in Q3 2012.
“We've been observing an increase in subprime borrowers in the auto loan space now for several quarters and we do expect this will eventually push the overall delinquency numbers higher,” said Turek.
“New loan originations are growing and that has helped the 60 day or more delinquency rate remain low, and we forecast that delinquencies will remain about the same in the first quarter, possibly even dropping slightly,” he added.
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