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TransUnion: Auto Delinquency Rate to Rise, Auto Loan Debt to Soar in 2014
Thursday, December 19, 2013 7:00 AM

TransUnion's annual auto loan forecast calls for increases in both delinquency and debt levels during 2014. The national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) is projected to rise to 1.19 percent by the end of 2014 from an estimated 1.10 percent at the conclusion of 2013. Auto loan debt per borrower is also expected to jump more than $1,000 from a projected $16,942 in Q4 2013 to $17,966 in Q4 2014.

According to TransUnion, a contributing factor to lower delinquency levels is the fact that non-prime borrowers make up a smaller portion of all auto loans. Non-prime borrowers are identified as those with a VantageScore® credit score lower than 700 on a scale of 501-990. Even though the percentage of newly originated non-prime auto loans (33.18 percent in Q2 2013) has increased, the impact on the overall delinquency is minor.

In Q3 2013 (latest data available), non-prime borrowers made up 29.8 percent of all auto loans. This is significantly down from the Q3 high observed in 2008, when 34.6 percent of non-prime borrowers comprised all auto loans. In Q3 2013 there were more than three million fewer auto loans (down nearly 15 percent) in the non-prime borrower segment than there were in Q3 2008. As a comparison, the total auto loan population has only dropped about 1 percent in that same timeframe, or around 550,000 fewer auto loans

TransUnion projects auto loan debt to continue to rise, finishing 2014 with 15 straight quarterly increases. The projected $17,966 auto loan debt level in Q4 2014 would mark a 6.0 percent increase from the previous year, greater than those expected or observed in 2013 (+5.5 percent), 2012 (+4.8 percent), 2011 (+2.1 percent) and 2010 (+0.6 percent).

TransUnion's forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The credit bureau notes that the forecasts would change if there are unanticipated shocks to the global economy.

Following is TransUnion’s 60-Day Auto Loan Delinquency Historical Data and Projections for 2014

Highest Auto Loan Delinquency States Q4 2014

Mississippi

2.25 percent  

Oklahoma

1.95 percent

Louisiana

1.90 percent

 
Lowest Auto Loan Delinquency States Q4 2014

Oregon

0.54 percent

North Dakota

0.55 percent

Minnesota

0.64 percent