TransUnion.com: National Auto Loan Delinquency Rates Decline Nearly 18 Percent in First Quarter of 2008

CHICAGO, July 7 -- TransUnion.com released today the results of its analysis of trends in the auto lending industry for the first quarter of 2008. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data that may be found on TransUnion's Web site.

Statistics

The national 60-day auto delinquency rate experienced a noteworthy drop between the fourth quarter of 2007 and the first quarter of 2008, falling nearly 18 percentage points (from 0.79 percent to 0.65 percent). Year over year, auto loan delinquency rates have remained essentially flat, moving from 0.64 percent to 0.65 percent. Historically, there is a decrease in 60-day auto loan delinquency between the fourth and first quarters, however the 18 percent drop is the sharpest in four years.

Auto loan delinquency (the ratio of borrowers 60 or more days past due) was highest in Louisiana at 1.19 percent, followed by Alabama at 1.07 percent. The lowest auto loan delinquency rates were found in North Dakota (0.30 percent), Montana (0.35 percent) and Wyoming (0.37 percent).

In another sign of a potentially better auto finance market, average auto debt nationally rose 0.75 percent in the first quarter of 2008 to $12,833. Year over year, the increase is even greater (1.88 percent) as the national average has risen nearly $240 from $12,597 in the first quarter of 2007.

The steepest increases in average auto debt occurred in Alabama (4.2 percent growth), Louisiana (2.9 percent) and Maine (2.6 percent), while the District of Columbia experienced the sharpest drop in average auto debt (-4.0 percent) followed by Hawaii (-2.2 percent). For auto debt, the largest state average was in Nevada at $16,034 followed by Arizona at $15,272. The lowest average auto debt was in Michigan at $10,610.

Analysis

"The availability of home equity for financing auto purchases has diminished significantly in states like Nevada and Arizona, thus contributing to higher auto loan debt," said Peter Turek, automotive vice president in TransUnion's financial services group. "Even states that have the highest 60-day delinquency rates like Louisiana and Alabama have shown a decrease over the prior quarter. According to the IRS, individual income tax refunds were larger (up 3.5 percent) and consumers filed earlier than in the previous year. It is plausible the tax refunds from the government are helping consumers with their debt burden."

The largest improvements in delinquency from the previous quarter were found in Hawaii (42 percent decrease from 1.03 to 0.60 percent), Maryland (33 percent decrease from 0.79 to 0.53 percent) and Rhode Island (32 percent decrease from 0.84 to 0.57 percent).

Forecast

TransUnion expects a continued rise in average auto debt as consumers seek a solution to higher energy prices. One such solution could involve consumers trading out of vehicles that have lost value or have lower payments for newer, more fuel-efficient cars, thereby leading to higher overall debt as the new auto loans will be further from their respective payoff dates.

"Our current forecasting models indicate that the national 60-day auto delinquency rate is expected to gradually rise from a value of 0.65 percent in the first quarter of 2008 to 0.75 percent by year end," said Turek. "This is not a material difference from the recent high of 0.79 in the fourth quarter of 2007, and the gradual increase might generally be attributed to seasonality effects in auto loan delinquency. However, we might see an as-yet unquantified reduction in auto loan delinquency based on this 0.75 percent forecast, as the more conservative underwriting standards and more aggressive collections efforts on the part of many auto lenders gain momentum and begin to bear fruit through the rest of the year and 2009."

As far as state projections, Louisiana (1.3 percent) is anticipated to be the area of country to experience the highest average delinquency rate in 2008, while Montana (0.2 percent) should prove to have the lowest level of delinquency.

Automotive delinquency statistics, coupled with mortgage and bankcard delinquency information released earlier this month on TransUnion.com, present an overarching credit picture of the U.S. consumer in the 1st quarter of 2008 and highlight geographic areas of concern. Statistics of note and forecasts for the mortgage and bank card sectors were as follows:

-- Mortgage loan delinquency (ratio of borrowers 60 or more days past due) increased for the fifth straight quarter, hitting a national average high of 3.23 percent for the first three months of 2008 and are a staggering 61.5 percent higher than first quarter 2007.

-- Mortgage borrower delinquency rates in the first quarter of 2008 were highest in Nevada (5.81 percent) followed closely by Florida (5.38 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.17 percent), Wyoming (1.41 percent) and South Dakota (1.48 percent).

-- Average national mortgage debt per mortgage borrower rose slightly (0.29 percent) to $191,917 from the previous quarter's $191,370. Average national mortgage debt increased 5.38 percent year over year, compared to $182,126 in the first quarter of 2007.

-- National average credit card debt per credit card borrower dropped to $1,673, a 1.25 percent decrease from the previous quarter's $1,694, though the average remains 5.6 percent higher than the same period last year ($1,584).

-- The steepest increases in average credit card debt over the previous quarter occurred in Alaska (1.54 percent), Hawaii (1.45 percent) and Alabama (0.44 percent). The District of Columbia experienced the largest drop in its average credit card debt (-4.38 percent), followed by North Dakota (-4.00 percent) and West Virginia (-3.67 percent).

-- Nationally, the ratio of credit card borrowers delinquent on one or more of their credit cards declined to 1.19 percent in the first quarter of 2008, down 12.5 percent over the previous period. However, the total still remains higher than the same period last year (0.91 percent).

TransUnion's Trend Data Database

The source of the underlying data used for this analysis is TransUnion's Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels.

About TransUnion

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data, advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals.