The third quarter 2014 auto delinquency report from TransUnion shows a continuing increase in auto loan delinquencies and auto loan balances
Latest TransUnion Report
Here at Auto Credit Express we've just reviewed the latest TransUnion report on auto loans and find that it contains information consumers with credit issues should be aware of.
According to TransUnion, the amount of car loan debt per borrower rose 3.9 percent from the third quarter of 2013 to the third quarter of 2014. The national auto loan delinquency rate (borrowers 60 or more days past due) also "increased to 1.16% in Q3 2014, up from 1.02% in Q3 2013."
Subprime Car Loans
More importantly for credit-challenged borrowers, the report also contained information about subprime auto loans:
The subprime delinquency rate (those consumers with a VantageScore® 3.0 credit score lower than 601) increased from 4.50% in Q3 2013 to 5.31% in Q3 2014. The share of non-prime, higher risk loan originations (with a VantageScore® 3.0 credit score lower than 661) grew by 14 basis points (from 36.39% in Q2 2013 to 36.53% in Q2 2014). This percentage is higher than what was observed five years ago near the end of the recession (31.67% in Q2 2009).
"We've been at an elevated state of subprime originations for several quarters, and the good news is that there has not been a material impact on the overall auto loan delinquency rate," said Turek. "The uptick in delinquency reflects a healthy and thriving auto finance industry where credit is more broadly available to all consumers."
Borrowers with Poor Credit
Although the increase in subprime auto loan delinquencies doesn't seem to have affect the availability of loans to borrowers with credit issues, we h3ly suggest that these consumers consider these suggestions:
- Know your credit scores and the information in your credit reports
- Have a 10 percent down payment in cash or real trade equity
- Keep the loan term as short as possible
- Finance an affordable car for a better loan to value ratio and put off financing something more expensive until you've reestablished your credit.
The Bottom Line
Although the subprime auto loan market continues to thrive, borrowers with large down payments and lower loan to value ratios will continue to have a better chance of getting financed.
Another great tip: Auto Credit Express matches buyers with credit problems to dealers that can offer them their best chances for auto loan approvals.
So if you're ready to reestablish your auto credit, you can start now by filling out our online car loan application.