Consumer Car Buying Advice Blog

Credit bureau TransUnion has released its fourth quarter 2009 auto delinquency report showing no rise in delinquencies Which could be positive news for consumers hoping to finance their next vehicle with a bad credit car loan.

TransUnion fourth quarter report

Here at Auto Credit Express, we see that TransUnion has released its latest report on automotive lending – this time dealing with auto loans in the fourth quarter of 2009. These auto delinquency forecasts from TransUnion, one of the three major credit bureaus, are extracted from a huge database consisting of 27 million consumer records that are randomly sampled every quarter. As such, it’s fair to assume that the results are relatively accurate.

According to Trans Union, the national auto loan delinquency rate showed no change between the third and fourth quarters of 2009, while the year-over-year delinquency rate actually decreased by 5.81 percent.

Their analysis

“Going against traditional seasonal patterns, the flattening of auto delinquency rates in the fourth quarter may be an optimistic sign for payment behavior over the remainder of this year,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit. “Since 2000, auto delinquency rates have increased in the fourth quarter except for one occasion back in 2003. In fact, at the start of the recession (fourth quarter of 2007), the auto delinquency rate increased nearly 15 percent from the prior quarter. Part of the reason why we may be seeing a gradual turnaround in delinquency rates is the impact of new lower risk loans over the past several quarters including new loans from the popular government program, Cash for Clunkers.”

TransUnion’s report shows that 18 states witnessed a decline in quarter-to-quarter delinquency rates while a total of 35 states experienced a decline on a year-over-year basis.

As we see it

The bottom line for bad credit car loan applicants is that the drop in loan originations seems to have halted and that subprime lenders are beginning to increase the actual number of bad credit car loans they are writing. At the same time, these lenders are continuing their conservative lending criteria with loans that are being subject to tight lending standards. When comparing year over year car loan environments, this means that a loan applicant with bad credit and a given credit score will still be subjected to comparatively higher interest rates (probably with a shorter loan term) and will be asked to put down a larger down payment, given the current credit market.

At Auto Credit Express, our advice to consumers seeking bad credit car loans remains the same as it has been since the beginning of the current recession:

• Know your credit score and what’s contained in your credit report
• Plan on coming into the loan with at least 10 percent down in cash or trade equity
• Keep the loan term as short as possible
• Buy a compact of midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit.

Helping our applicants find the right dealer

For nearly 20 years, Auto Credit Express has been helping people with credit problems get approved for new and used car loans. Our dealer affiliates work with a broad spectrum of bad credit auto loan lenders to get you approved. Since our inception, we have processed over 2,000,000 online bad credit auto loans and our dealers have closed over 1 Billion dollars in auto loans.

For more information, please visit www.autocreditexpress.com to see what we can do for you.

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