Auto Loan Delinquencies Could Rise 33 Percent

The auto loan delinquency rate could rise as much as 33 percent this year, driven by the impact of the faltering housing industry on consumer spending, according to an analyst with TransUnion.com.

The auto loan delinquency rate reached 0.79 percent in 2007’s fourth quarter, for a rise of 18 percent for the year, Ezra Becker, principal analyst in TransUnion’s financial services group, told insideARM. TransUnion defines auto loan delinquencies as loans that are 60 days or more past due.

The rate could rise to 1.05 percent by the end of this year, for an increase of 33 percent, said Becker.

The auto delinquency rise has been lagging the fall of the housing industry, said Becker. “The mortgage crisis is having an impact on overall consumer credit. We’ve seen it already on credit cards. Soon we will see it on the auto side,” said Becker. “If a consumer’s mortgage rises higher, then he has less to pay on his auto loan.”

The 33 percent rise doesn’t necessarily mean a similar increase in losses on the loans as lenders have been intensifying their collections, said Becker.

“We already see lenders ramping up their collection efforts,” said Becker. “For example, they are making a phone call (to the delinquent account) instead of sending a letter.”

TransUnion.com also released statistics on average auto debt broken down by state. The average auto debt nationwide rose 0.13 percent in the fourth quarter of 2007 to $12,738, with prices typically higher in large metropolitan areas, TransUnion.com reported.

The state with the highest average was Nevada with $16,133 and the lowest was Michigan with $10,454. Generally, areas with older populations and older loans saw lower average auto loan debt per borrower, according to TransUnion.com.

TransUnion.com releases quarterly analysis of mortgage, credit card and auto lending. It uses Trend Data, a database of 27 million anonymous consumer records randomly sampled every quarter from TransUnion’s national database. Chicago-based TransUnion provides consumer credit information gathering and analysis.