Consumer Car Buying Advice Blog

The latest annual auto loan delinquency and debt forecast from TransUnion predicts a continued rise in car loans even for buyers with less than perfect credit

Keeping applicants informed

If you’re someone who needs a car but has experienced credit problems in the past there was more good news yesterday from TransUnion.

At least here at Auto Credit Express that’s our take on the latest lending forecast from TransUnion. It’s also especially important to us because, for the past two decades, we’ve been helping car shoppers with bruised credit find the right new car dealers that can arrange for approved auto loans.

But in addition to this free service, we also like to keep these car buyers up to date with what’s going on the auto lending industry, because consumers with poor FICO scores are particularly impacted by the overall climate in auto lending.

Auto loan delinquency and debt

Yesterday, TransUnion released both its annual auto loan delinquency forecast as well as its auto debt per borrower forecast for the upcoming year and the results show that qualifying for a car loan with credit problems should continue to get better.

According to TransUnion, “the ratio of borrowers 60 or more days past due will remain near record-low levels throughout 2013. In addition, the amount of debt for each borrower will also continue to trend upwards which is also “a sign that auto financing will continue to grow as new and used car sales increase.”

And while TransUnion also expects the auto loan delinquency rate to rise slightly year-over-year from 0.36 percent at the end of this year to 0.37 percent by the end of next year, the report also points out that “the level has dropped more than 50% since reaching its peak in Q4 2008 at 0.86%.

TransUnion’s predictions

“The national auto loan delinquency rate should stay relatively low throughout 2013 as the economy continues to improve,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit. “Macroeconomic factors such as the improving unemployment rate, median household income and housing prices are some of the primary drivers that lead us to a favorable forecast.”

Car buyers with credit problems

The forecast also noted that delinquency rates have managed to remain low even as more buyers looking for damaged credit car loans enter the market. The report states that “The low auto loan delinquency environment has persisted even as more non-prime, higher-risk consumers carry auto loan balances. In Q3 2011, TransUnion’s Industry Insights database found approximately 19.97 million borrowers with a VantageScore credit score lower than 700 (on a scale of 501-990) carried auto loan balances. This number increased to 20.66 million in Q3 2012.”

“It’s a real sign that the automobile market is on solid footing that even with more non-prime consumers carrying auto loan balances, we’ve continued to maintain a low national auto loan delinquency rate,” said Turek. “We believe this is happening partly because consumers are now valuing their auto loans even more than their credit card and mortgage loans; also lenders and dealers are putting even more emphasis on placing buyers in vehicles and loans that best fit their financial situation.”

What buyers with credit issues can do

For consumers needing bad credit auto loans, the overall lending market continues to improve even as subprime auto lenders are increasing the number of loans originations to a broad range of car buyers with low credit scores.

Along with this positive news come some tips for consumers with less than perfect credit looking for auto loan approvals:

• Know at least one of your three credit scores as well as what’s in your three credit reports
• Plan for a 10 percent down payment either in cash or real trade equity
• Keep the loan term as short as possible
• “Placing buyers in vehicles and loans that best fit their financial situation” also means that car shoppers with damaged credit should choose a compact or midsize car and put off buying anything larger until after reestablishing their auto credit.

The Bottom Line

Car buyers with bad credit now have a better chance that ever of getting approved for an auto loan. One of the obstacles to making this happen, however, is the fact that not all new car dealers are willing to work with poor credit consumers.

That being said, Auto Credit Express specializes in helping people with car credit difficulties find dealers that can give them their best chance at approved auto loans.

So if you’re serious about getting your auto credit back on track, you can begin the process now by filling out our online auto loans application.

Tags: Bad Credit, transunion auto loan delinquency and debt forecast

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