Areas With Large Population Growth Also Have Greatest Levels of Average Auto Loan Debt
This entry was posted on 4/22/2008 9:19 AM and is filed under Lending.
CHICAGO, April 21, 2008 /PRNewswire: An analysis of trends in the auto
lending industry during the fourth quarter of 2007 was made available
today on TransUnion.com. The report is the second in an ongoing series
of quarterly analysis of consumer lending that TransUnion will
release on their site.
Statistics
Average auto debt per auto loan borrower nationally rose 0.13
percent in the fourth quarter to $12,738. For auto debt, the largest
state average was in Nevada at $16,133, followed by the District of
Columbia at $15,818. The lowest average auto debt was in Michigan at
$10,454.
The steepest increases in average auto debt, correlating perhaps to
greatest demand, occurred in Oregon (3.55 percent growth), the District
of Columbia (3.34 percent) and New Jersey (1.91 percent), while Montana
experienced the sharpest drop in average auto debt (-3.7 percent)
followed by Maryland (-1.5 percent).
Auto loan delinquency (the percentage of auto loan borrowers 60 or
more days past due) was highest in Louisiana at 1.44 percent, followed
closely by Mississippi at 1.43 percent. The lowest auto loan
delinquency rates were found in Alaska (0.16 percent), North Dakota
(0.40 percent) and Wyoming (0.47 percent).
Analysis
"It is not surprising that the greatest levels of average auto loan
debt are found in areas with some of the biggest population growth
rates in the country, or where decentralized metropolitan areas make
car ownership more of a necessity than a convenience," said Ezra
Becker, a principal consultant in TransUnion's financial services
group. "It is in these markets that demand is higher and thus prices
are greater. It also may be that auto loans in these regions are
relatively younger and hence have higher balances. Demand is lower and
loans are more seasoned in states like Michigan, Nebraska, Maine and
Ohio, thus balances are generally lower as the average auto loan gets
closer to its payoff date."
"From a risk perspective, auto loan delinquency seems to mirror the
continued economic downturn that has plagued southeastern states like
Louisiana and Mississippi in the long wake of Hurricane Katrina, and
has been indirectly exacerbated by the continuing mortgage crisis,"
Becker added.
The analysis found that California dropped to third place in the
list of highest delinquency from its historical spot as second highest
behind Mississippi. The largest improvements in delinquency from the
previous quarter were found in Alaska (-41percent), North Dakota (-35
percent) and Oregon (-12 percent), and were not so much due to any
tremendous improvement in the risk presented by consumers in those
states, but rather from the fact that delinquency levels were so low to
begin with that small decreases in delinquency are relatively larger on
a percentage basis.
Forecast
The national 60-day auto borrower delinquency rate is expected to
continue to rise throughout 2008 from 0.79 percent in fourth quarter
2007 to 1.05 percent by year end. This is primarily due to anticipated
deterioration in economic conditions throughout the country as a
consequence of the mortgage crises. As far as state projections go,
Mississippi (1.4 percent) is anticipated to be the state that will
experience the highest average delinquency rate in 2008, while the Alaska
forecast predicts the lowest level of delinquency among auto loan
borrowers.
