Auto Delinquency Trends and Bad Credit Car Loans

TransUnion has just released the results of a first quarter analysis of auto delinquencies and it appears that there is still a long way to go for bad credit car loan shoppers.


Today TransUnion, one of the three major credit bureaus in the United States, released its analysis of trends in the automotive lending industry for the first three months of 2009. It should be pointed out that the TransUnion analysis is much different from the typical surveys that we see here at Auto Credit Express. Unlike those surveys that may include anywhere from a few hundred to a few thousand respondents, the TransUnion effort is based on a random sample of 27 million individual credit files, give or take a few, and it allows the company to view the economy through the lens of credit files practically in real-time.

First quarter drop is only seasonal

Although there was a bit of good news for the first quarter – the 60-day delinquency rate on auto loans dropped slightly from the fourth quarter of 2008 (from 0.86 to 0.83 percent) – this was tempered by the fact that January-March delinquencies are normally lower than the October to December quarter. TransUnion was also quick to point out that first quarter delinquencies in 2009 were also up 27.69 percent (nationally) year-over-year from the first quarter of 2008 – a sign that the overall economy is still very weak.

How it will affect bad credit car loan buyers

While there have been recent signs that the economic nosedive of 2008 is beginning to level off, there are very few signs, from TransUnion’s consumer activities, that would indicate the economy is on the upswing. According to TransUnion’s own analysis, “As in recent quarters, both the availability of funding (liquidity crisis) in the market for auto loans and tighter lending standards have significantly decreased the number of auto loans in the market, putting continued upward pressure on delinquency rates.

For bad credit car loan buyers, this means that lenders will continue to ask for comparatively larger down payments and subprime auto loan interest rates will continue to trend higher than they were prior to 2008.

One other trend to take note of is that different areas of the U.S. are being impacted by the current recession as areas of rising auto delinquencies are closely following those same areas that have experienced rising mortgage delinquencies.

“At the end of the 2001 recession, the national auto delinquency rate increased to a high of just over 1 percent, and then began to edge downward for the next four or five years,” said Peter Turek, TransUnion’s automotive vice president. “As the recession came to a close in November of 2001, three of the five riskiest cities in the country were found in Texas: El Paso (5.00 percent), McAllen (2.46 percent) and Laredo (2.09 percent). In our current recession, Laredo is still leading in terms of auto delinquency (3.08 percent), but now is followed closely by metropolitan areas within the state of California such as Visalia (2.33 percent) — reflecting the impact of the housing market on that state’s economy. Today, the least risky metropolitan area is Corvallis, Ore., which shoulders an almost zero auto delinquency rate — a position consistent with what it held during the previous recession.”

The Bottom Line

If you are in the market for a bad credit car loan, be prepared to come to the table with a larger down payment and expect to pay a higher interest rate than you might’ve had to pay in the past.

At Auto Credit Express, we have helped literally thousands of people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. Our national network of affiliate dealers specializes in bad credit car loans. Do you still have questions? Our resource center will help you determine how much car you can afford and, unlike other sites, our toll free number is listed on every page in case you have any additional questions.

When you decide to buy a car, our credit application can be filled out in the comfort and security of your own home. For more information, visit where we hope to see you “on the road” to better credit!

Posted on June 15, 2009 by in Used Cars
Reader Comments

One Response to Auto Delinquency Trends and Bad Credit Car Loans

  1. Jude says:

    You simply have to be able say ‘no, thanks at that price’ at least once to the dealer. This gives them a strong message that you are serious about your research.

    You should also bring a piece of paper to the dealership and make sure you do all the math of the finance calculations yourself. The point is not that they will do the math wrong. The point is you will see exactly how the deal is structured. Do not be afraid to take the time to do this or look like a fool for mapping out your car deal in the dealership.

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