Those auto industry experts who see the glass as half empty when it comes to the recession may need to consider a change of tune, reports the Wall Street Journal. That’s because a TransUnion study has indicated that delinquency rates for consumer auto loans that are at least 60 days past due decreased significantly in the second quarter of 2010. This welcome sign of recovery was a nice addition to TransUnion’s previous finding that the number of credit card delinquencies had also waned.
Buyers who become savers slow the turnaround
Fewer consumers have been willing to plunk down their incredible shrinking dollars on big ticket purchases like automobiles, which has been less than stimulating for prospects of an economic turnaround. Yet it has been a positive for auto loan repayment habits, says Peter Turek of TransUnion. “Although part of the reason for the turnaround in delinquency rates is the influence of new, lower risk loans, consumers do not see a quick fix to the short-term economic and employment situation,” he said.
A 20 percent improvement from 2010’s first quarter
The auto loan delinquency rate drop for delinquencies of 60 days or more fell to 0.53 percent, which constitutes a 20 percent decrease from 2010’s first quarter. It’s the largest decrease since the summer of 2001, writes the Journal. Rhode Island, Montana and Utah were the only states to show an increase in the 60-day delinquency rate, while Vermont was the biggest loser. The Maple Syrup state experienced nearly a 50 percent drop, from 1 percent to 0.58 percent. In the category of “It’s expensive to live in paradise,” Hawaii showed the greatest drop in the origination of auto loans. Milking old cars for everything they’re worth is probably less expensive than buying a gallon of milk in Hawaii, anyway.
In spite of the good news, TransUnion’s experts predict a 0.6 percent increase in delinquency by the fourth quarter. The probable cause would be the anticipated weight of holiday spending.