By on December 16, 2009

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Credit reporting agency TransUnion is forecasting a rise in auto loan delinquencies next year, adding to the list of factors that could slow a turnaround in auto sector sales and profits in 2010. 60-day auto loan delinquency has been rising throughout 2009, reports the WSJ, as tighter lending standards have increased the ratio of delinquencies in outstanding loans. Those tighter standards sill contribute to a slight downturn in delinquencies in the first half of next year TransUnion’s Peter Turek tells Automotive News [sub], but by halfway through the year those numbers should increase again. Nationwide, TransUnion reckons .92 of all auto loans will be in delinquency by the end of 2010, compared to .86 at the end of this year. The average national auto debt is $12,542, and the Freep reports that loan terms are falling and average credit scores for approved loans are rising.

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15 Comments on “Auto Loan Delinquencies To Rise In 2010?...”

  • avatar

    Wonder what % of those delinquent loans were originated by Cerebus (GMAC/Chry. financial). 

    • 0 avatar

      An interesting point but when I was at ChryFi the real crazy stuff happened when the Germans still owned it but had the deal with Cerberus inked.  ChryFi always bought deep into C & D paper anyway and it all blew up starting late 2007.

  • avatar

    Are the .92 and .86 numbers percentages?  Like, .92% and .86% of the loans were delinquent?  That seems too low to me.

    • 0 avatar

      Those are the reported national averages for car loans 60 days or more past due… state-by-state averages vary, with Mississippi projected to end 2010 with the highest rate of 1.75 percent.

      Full presser here:

    • 0 avatar

      The article states “0.92 percent,” showing “percent” and also adding a “0” in front of the decimal point for clarity.  This might be a rare time when the original article is written more clearly than the TTAC summary.
      Frankly, these numbers seem far lower than I expected.

  • avatar

    I think 9.2% and 8.6% sound correct to me. Maybe just a transposed decimal.

    Percentages only tell a limited story when the denominator fluctuates so heavily.

  • avatar

    I believe that the .86 and .92 percentages are correct, if 9.2% of car loans were delinquent given how much they cost and how many are sold in comparison to Houses, then this country would be at the financial apocolypse.  People let go of thier houses, credit cards, kids, etc. before thier cars.

  • avatar

    rnc (and Mr. Niedermeyer) have it correct.

    If auto loans were near 10% repo, used cars would be (even closer) to free. You can drive your car and live in it (or at least get somewhere else).  You cannot do that with your house/condo. Besides, banks actually will restructure a car loan – despite all the talk, they still aren’t terribly cooperative about restructuring a home loan.

    I do think their estimates are a bit on the conservative side, but they could be fatcoring in the increased number of houses that are going into forecloseure next year – likely 4MM +… 

  • avatar

    So let’s say 10 million new cars are sold in the US in 2009, .92% of those sales would equal 9,200 in delinquent status. Out of 10 million. That’s nothing. Why is this news??

  • avatar
    Steven Lang

    Sorry, but this is NOT the national rate.
    It has pretty much been running at a 10% to 12% rate for quite a while now. By the way, the numbers incorporated here do not incorporate buy-here pay-here lots or other large dealerships that do self-financing. When that’s taken into consideration the real delinquent rate is closer to the 15% to 17% range.
    The numbers in the article may be referring to a monthly rate.

  • avatar

    Thanks for the pointing out it was a monthly figure.

     Mannheim says about 1.4 MM repos this year, IIRC.

    Pretend the sales number around 12MM, very roughly about 12% repo annual.

    I should’ve clarified too.

    • 0 avatar

      One out of 10 cars sold in the US gets repoed?  That’s astonishing!  The last thing that any auto finance company/bank wants to do is repo a car since they loose money on almost every single repo.  How do these people get credit to begin with?

    • 0 avatar

      1.4MM repos, but that includes any car with outstanding financing (not just cars sold in one year), cars are financed for 7, 5 and 3 years, using 5 as average that would be around 65 million (new when sold) cars with outstanding financing at any time, factor in used cars and the .92% isn’t that far fetched.

  • avatar

    skor>  Welcome to the US :-)
    IMHO if you can’t pay cash for a new car or put 20+% down, you should be buying used w/ cash.

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