TransUnion has released its first quarter 2013 auto delinquency report that shows a rise in auto loan delinquencies for borrowers with questionable credit

Auto lending to credit challenged buyers

Despite the increase in delinquencies, auto loans to consumers with problem credit continued to rise during the first three months of 2013.

Here at Auto Credit Express we see this as mostly good news for consumers with challenging credit. We base this assumption on more than twenty years of experience helping car buyers with bad credit searching for online auto loans find those dealers that can give them their best opportunities for auto loan approvals.

We also believe that it's important for these buyers to understand the general lending for people who face challenging credit situations – something that's covered in the most recent quarterly report from TransUnion that covers automotive lending delinquencies during the period from January through March of 2013.

In particular this should help answer the question, "How hard is it to get a car loan with bad credit?"

TransUnion first quarter report

Earlier today TransUnion released its latest findings covering automotive lending –dealing with auto loans in the first quarter of 2013. This report, according to TransUnion, is based "on credit data from virtually every credit-active consumer in the United States." The results, then, should fairly accurately reflect the current automotive lending climate.

According to TransUnion, the national auto loan delinquency rate (borrowers 60 or more days past due) "increased slightly year over year from 0.82% in Q1 2012 to 0.88% in Q1 2013. A rise in delinquencies for subprime borrowers (from 5.09% in Q1 2012 to 5.50% in Q1 2013) was a primary driver of the increase."

However on a quarter over quarter comparison, "the 60 or more days past due auto loan delinquency rate experienced a seasonal 12-basis point drop from 1.00% in Q4 2012. Subprime borrower accounts also saw a quarterly decline from 6.02% at the end of 2012."

Subprime lending

The report also contained some good news for car buyers with problem credit:

"We've been monitoring the auto loan landscape closely for some time to see if increased subprime lending would start pushing delinquency rates up," said Peter Turek, vice president of automotive for TransUnion. "We found that while subprime borrowers are receiving more auto loans, the percentage of these loans to all auto loans made remains the same as last year so there has not been a dramatic effect to the overall delinquency rate."

TransUnion also noted that "subprime borrowers in Q1 2013 made up 15% of all auto loan accounts. This was the same percentage as Q1 2012, and a much smaller percentage than what has been observed in the last few years."

In addition, "auto loan account balances in the subprime category have experienced a rise of 6.6% from $11,266 in Q1 2012 to $12,006 in Q1 2013. In the last two years, balances for subprime consumers have increased more than 11%."

Turek also voiced some caution over these findings:

"While the auto loan market has been performing exceptionally well the last few years, there is some concern about the subprime market. On one hand, subprime borrowers make up a smaller percentage of the overall market and their delinquency rates are actually the same as they were two years ago. However, their account balances have risen more than $1,200 in that same period placing more of an economic burden on lenders if they were to go delinquent."

Our advice

With this news in mind, here is our advice for car buyers with less than perfect credit:

• Know your FICO scores as well as the information contained in your credit reports
• Plan on contributing a minimum of 10 percent down in cash or actual trade equity to your auto loan
• Keep the loan term as short as possible
• Buy a subcompact, compact or affordable midsize vehicle, putting off considering any other type until after good credit has been reestablished.

As we see it

As it stands, a broader credit range of car shoppers now have their best chances in at least the past five years of getting an application for auto credit approved.

More good news: Auto Credit Express matches people that have experienced credit difficulties with those new car dealers that can offer them their best chances for approved auto loans.

So if you find yourself in this situation and you're ready to reestablish your car credit, you can begin now by filling out our online auto loan application.