TransUnion
Auto Delinquency Rate to Rise, Auto Loan Debt to Soar in 2014
CHICAGO, IL--(Marketwired - Dec 17, 2013) - 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% by the end of 2014 from an estimated 1.10% 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.
"While we expect auto loan delinquencies to rise in 2014, they will remain well below levels observed during the recession and its immediate aftermath," said Peter Turek, automotive vice president in TransUnion's financial services business unit. "One of the primary drivers for low delinquency rates is the strength of the used car market; borrowers who cannot afford their car loan payments usually have the option of selling the car and becoming whole on the loan. The wide availability of this exit strategy has caused the overall volume of auto loan debt to rise faster than the delinquent volume of auto loans, which leads to a lower delinquency rate -- it's a denominator effect."
Since 2007, the auto loan delinquency rate has been as low as 0.86% in Q2 2012 and as high as 1.59% in Q4 2008. On average, the delinquency rate during the fourth quarter between 2007 and 2012 was 1.32%.
60-Day National Auto Loan Delinquency Rate (Q4 2013 and Q4 2014 include projections)
Q4 2007 | Q4 2008 | Q4 2009 | Q4 2010 | Q4 2011 | Q4 2012 | Q4 2013 | Q4 2014 | |||||||
1.38% | 1.59% | 1.54% | 1.22% | 1.07% | 1.09% | 1.10% | 1.19% |
TransUnion data show that auto leasing may play a greater role in the industry during 2014. The number of leases issued since the recession ended in 2009 has steadily climbed. In the first six months of 2009, approximately 500,000 auto leases were issued. Three years later, this number doubled to one million leases for the first six months of 2012. This number increased further in 2013, with more than 1.3 million auto leases issued in the first six months of the year.