Auto lending delinquency rates stay low

TransUnion’s analysis of the auto lending market at the start of 2016 has found that delinquency rates remain low, though energy state rises are beginning to have greater impact.

Its Q1 2016 Industry Insights Report found that the oil slump continued to impact consumer credit performance in those states with economies more reliant on the energy sector.

The research indicated that serious delinquency levels for auto loans and credit cards continued to increase in energy-sector states such as North Dakota, Oklahoma and Texas.
Driven in part by these state-level increases, the national average for auto loan delinquencies rose to levels not observed during the first quarter in at least three years.

TransUnion analyzes year-over-year metrics to account for seasonality.

Serious delinquency on auto loans (60 or more days past due) hit 1.12% in Q1 2016, the first time it has topped 1% in the first quarter since 2011.

“Rising delinquency rates in energy-sector states such as Oklahoma and North Dakota are contributing to the uptick in the national delinquency rate for auto loans. An increase of loans to non-prime credit risk borrowers also has pushed these delinquency rates up. Despite the delinquency rises, overall levels of delinquency remain relatively low from a historical perspective,” said Ezra Becker, senior vice president of research and consulting in TransUnion’s financial services business unit.

In Q1 2016, 76.37 million consumers had an auto loan, an increase of five million from the first quarter of 2015. The number of consumers with an auto loan grew 7.1% from 71.29 million in Q1 2015, according to TransUnion figures.

Serious auto loan delinquency rose to 1.12% in Q1 2016, a 13.1% increase from 0.99% in Q1 2015. Despite the yearly increase, the delinquency rate remains below the levels observed in Q1 2010, when the delinquency rate reached 1.21%.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), auto loan originations grew 5.4% year-over-year to 6.51 million in Q4 2015, up from 6.17 million in Q4 2014. The average new account balance (reported one quarter in arrears) reached $20,469 in Q4 2015, its highest level since the recession. The average new account balance increased 2.9% from $19,890 at year-end 2014.