Auto Loan Delinquency Rate Up Nearly 9%

The percentage of auto loans past due 60 days or more rose 8.9 percent in the fourth quarter of 2008, compared with the prior-year period, according to credit reporting agency TransUnion. And the numbers point to auto delinquencies shooting to their highest point in a decade by the end of the year.

The rate rose to 0.86 percent for the three months ended Dec. 31, compared with 0.79 percent in the 2007 fourth quarter.

Auto-loan delinquencies tend to be cyclical, with the fourth quarter typically showing the fewest problematic payments. But the recession appears to be changing those patterns.

“Certainly the overall economy, the weak labor markets, disposable income, are all affecting auto debts as well,” said Peter Turek, automotive vice president in TransUnion’s financial services group.

Delinquencies were highest in Mississippi, at 1.62 percent, followed by California, at 1.46 percent, and Louisiana, at 1.37 percent. The states with the lowest auto-loan delinquency rates were Alaska, at 0.19 percent, North Dakota, at 0.34 percent and Wyoming, at 0.41 percent. In all, 10 states are above the national average and 30 are below it.

Average auto debt fell 0.2 percent to $12,713 from the prior year. The state with the highest average auto debt continued to be Nevada, at $15,225, followed by Texas at $14,848. Nebraska had the lowest, at $10,685. TransUnion said the nationwide decline reflects fewer loans on the market as credit remains tight.

Turek is forecasting the rate of auto delinquencies will rise to 1.13 percent nationally by the end of 2009, which would be the highest rate on record since TransUnion started tracking statistics about 10 years ago.

“There’s continued pressure on consumers in managing their debt burden,” he said. “The overall economy, the weak labor market and disposable income will continue to plague them as they try to deleverage.”

TransUnion uses data culled from approximately 27 million individual credit files to develop its data.

Since the recession began in December 2007, auto loan delinquencies have jumped 25 percent, compared with a 10 percent increase in the 2001 recession, Turek said. He expects they will rise another 15 to 16 percent before peaking.

“The forecast clearly shows there’s still an increase looming out there,” he said.