Late-payment rate on auto loans rose in 2nd quarter

By Alex Veiga AP Business Writer As U.S. sales of cars and trucks have grown this year, so has the late-payment rate on auto loans. The rate of U.S. auto-loan payments late by 60 days or more rose to 0.95 percent in the second quarter from 0.87 percent a year earlier, credit reporting agency TransUnion said Tuesday. The latest auto loan delinquency rate was down from 1 percent in the first three months of the year, however, and remains below the average for the April-June period going back to 2007, the firm said. The increase compared with the second quarter a year ago follows strong growth in auto sales, which has fueled a rise in auto lending, including to borrowers with less-than-perfect credit. "In fact, there are four million more auto loan accounts in the marketplace than we observed just last year," said Peter Turek, automotive vice president for TransUnion. "This means with more auto loans in the marketplace and a delinquency rate ticking higher, we now have several thousand more delinquent accounts than at the midpoint of 2013." All told, TransUnion recorded 62.3 million auto loan accounts in the second quarter, an increase of 7 percent from a year earlier. As more Americans have been taking on loans to buy cars and trucks, they've also been carrying higher loan balances. Auto loan debt per borrower grew 4.1 percent to $17,090 in the April-June period from a year earlier. It's been increasing steadily for more than three years, driven by a strong market for new and used vehicles and low interest rates. New auto loans tend to have higher balances early on, which helps drive up auto loan debt. U.S. auto sales hit an annual rate of 17.5 million last month, the highest annual rate since January of 2006. As more drivers have gone car shopping, lenders have responded, making loans available to more borrowers, even those with checkered credit histories. The number of new auto loans increased to 6.2 million in the first quarter from a year earlier. The data lag by a quarter, so the latest TransUnion figures cover the January-March period. Some 34.4 percent of new auto loans issued in the first quarter were made to nonprime borrowers, up from 33.8 percent a year earlier. That's still less than the pre-recession share of nearly 37 percent in the July-September period of 2007, but up from a low of 25.6 percent in the third quarter of 2009. Non-prime borrowers are defined as those with a score lower than 700 on the VantageScore credit scale, which runs between 501 and 990, with borrowers scoring at 900 or above being considered prime borrowers, or the safest credit bet. Published: Thu, Sep 11, 2014