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Experian Reports Slight Rise in Poor Credit Auto Loan Delinquencies

Latest report from Experian Automotive shows a rise in thirty day loan delinquencies from finance companies that typically loan to customers with credit problems
Experian Reports Slight Rise in Poor Credit Auto Loan Delinquencies
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Car buyers facing credit issues should be aware of the fact that the latest report from Experian Automotive finds that finance company auto loans to consumers with bad credit experienced an increase in the 30-day delinquency rate during the fourth quarter of 2012.

While we don’t see this as good news here at Auto Credit Express we’d also like to point out that the report also contained some encouraging information for consumers with less than perfect credit. We should know, because we’ve spent the past twenty years helping car shoppers with questionable credit find those new car dealers that can offer them their best chances for approved auto loans.

Experian Automotive report

The February 21, 2013 report begins with the headline, “Sixty-day auto loan delinquencies rise for first time since 2009.”

It then goes on to state that “60-day delinquencies rose from 0.72 percent in Q4 2011 to 0.74 percent in Q4 2012. It was the first time since Q4 2009 that either 30- or 60-day loan delinquencies experienced a year-over-year rise.”

The report continued by stating that, “Thirty-day delinquencies showed a slight decline, dropping from 2.79 percent in Q4 2011 to 2.72 percent in Q4 2012. Banks, captives and credit unions all saw slight drops in 30-day delinquencies. Finance companies, typically lenders for credit-challenged customers, saw their 30-day delinquencies rise from 5.35 percent in Q4 2011 to 5.61 percent in Q4 2012.”

Here is Experian’s take on the results:

“Overall, our Q4 analysis shows that the auto lending market is extremely healthy,” said Melinda Zabritski, director of automotive credit for Experian Automotive. “Of course, you never want to see an increase in delinquencies, but when you take a step back and look at the market compared to where it was three years ago, we still have remarkable stability.”

Other information

So it wasn’t all bad news for buyers with auto credit issues as the report also found that:

•    Quarterly repossession rates fell 27.6 percent, going from 0.63 percent in Q4 2011 to 0.46 percent in Q4 2012.
•    Quarterly repossession rates for banks, credit unions, captives and finance companies all fell, with finance companies showing the sharpest decline (34.7 percent), dropping from 2.47 percent in Q4 2011 to 1.61 percent in Q4 2012.

But if you fall into the higher-risk category you should also be aware of the fact that subprime lenders will continue to be careful. Knowing this you might consider following these tips:

•    Know what’s in your credit reports as well as your credit scores.
•    Choose an affordable small or mid-sized car and with a payment that is no more than 10% to 15% of your gross monthly income (the lower the better).
•    With lenders continuing to be cautious while looking for lower LTV ratios, the higher your down payment, the better it will look. Not including new car rebates or dealer cash, a down payment of 15% or more will increase your chances of an approval.

The Bottom Line

Although lenders are increasingly willing to work with people with poor credit scores, they are balancing this fact by requiring that buyers have actual equity (cash down, trade equity) in these loans.

One more thing buyers with credit problems should know: if you’ve been turned down for a conventional car loan, it doesn’t mean the only option is a BHPH dealer. That’ because Auto Credit Express specializes in helping applicants with car credit issues find dealers that can give them their best chances at auto loan approvals.

So if you’re ready to reestablish your auto credit, you can begin now by filling out our online auto loans application.

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