REPORT: Car loan delinquincies jump almost 9 percent
Delinquent auto loans, those more than 60 days past due, are on the rise. According to credit reporting agency TransUnion, they ballooned 8.9 percent in the fourth quarter of 2008 when compared with the same period a year earlier. While glancing at the Detroit News headline would lead most to think delinquencies are now in double-digits nationwide, the actual default rate has risen to just .86 percent (up from .79 percent) – yeah, less than 1 percent (as optimists at Autoblog, we like to applaud the more than 99 percent of customers who are able to pay on time).The states with the highest delinquencies are Mississippi (1.62 percent), California (1.46 percent), and Louisiana (1.37 percent). On the other end, those with low delinquencies – and most likely to be paying on time – are found in Alaska (.19 percent), North Dakota (.34 percent), and Wyoming (.41 percent). If there is good news to be found in the report from TransUnion, it is that the average outstanding auto debt fell from the prior year – a direct reflection of owners holding their cars longer and credit tightening on new purchases.
[Source: Detroit News]
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Reader Comments (Page 1 of 1)
Farris 4:25PM (3/17/2009)
Man, talk about a sensationalist title by the Detroit News.
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Jeff Johnson 4:29PM (3/17/2009)
No surprises to me here -- when I think "winner" states the first two states I think of are California and Louisiana... *sarcasm detector explodes*
It still amazes me that people just choose to ignore their problem of not paying their bills as if they will just magically give up and go away. Times are indeed tough - but if you cant make the payments you gotta man up and call the bank, work with them to see if you can reach SOME sort of agreement.
If not - time to trade in that 08 Escalade or Benz for a fiesta or something actually in your price range. Will that be fun? Of course not - but you will be able to make the payments and cease adding bad debt problems to this countries already strained financial system.
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superman211 12:06AM (3/18/2009)
BUT OBOMA PROMISED!
frozen canuck 1:09PM (3/18/2009)
sounds good BUT these people with thier Escalades and Benz are SO upsided down. who will ever give then a $25,000 loan on a car that is worth $15,000
Flashpoint 4:32PM (3/17/2009)
But the point is, defaults are rising...
and that's mostly because of the rising rates of unemployment. People can walk away from their car loans just like those who walked away from their homes and now have pools filled with mosquito larvae.
I'm glad Autoblog put Honda's face on this one cause here in NYC, Honda's have massive defaults and repo's because the dealers were selling cars to people with shtty credit. Hillside Avenue Honda's defaults were past .7%
Even the other managers are shaking their heads.
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Chris 6:16PM (3/17/2009)
Ummmm......I'll correct you........the BANKS, not Honda dealers or Honda Finance, were lending money to people with crappy credit. My friend's 680 credit score could not get past Honda Finance, but Capital One and Wells Fargo stepped up with some ridiculous rates.
superman211 12:07AM (3/18/2009)
The Repo man must be busy these days!
Hugh G 4:35PM (3/17/2009)
I guess you could say the repo business is recession-proof! In fact, business is probably way better during hard times.
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13enS 4:45PM (3/17/2009)
Violent attacks against the repo man are up too.
...or maybe its just Oakland.
RemusRM 4:59PM (3/17/2009)
my buddy had to give his car to the repo since his work got cut in half and he still needs to pay rent and eat... and i really hate all this politically correct idiots that say pay your bill... When you make twice the minimum wage and have 4k in the bank that gets depleted fast even if you are careful.
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eatpusy 5:47PM (3/17/2009)
So your buddy should have saved more. Not attacking your buddy, but he's just one of many that didn't prepare adequately. There are yuppie types in NYC that are in the same situation.
Guessing your buddies age and the tone of entitlement, maybe your buddy should stayed living at home with 'rents longer until he could get a wage much higher that twice minimum.
And maybe your buddy was one of the many that rolled their taxes into their car payment. If you can't pay the tax, don't buy the product.
DKB_SATX 6:59PM (3/17/2009)
eatpusy: Having $4k in the bank puts RemusRM's friend WAY ahead of the average American who's making $10/hr or so. Lots of people have no savings, because it hasn't been a priority in the Decade of Consumption just ending. You know, when the wartime president told Americans to go shopping instead of buying war bonds or something. Americans' savings rate has been abysmal for years, and now it's going up because everyone is scared, but that tanks the retail sales numbers which gets lots of airplay on TV and gets people more scared... it feeds on itself.
Tony 8:41PM (3/17/2009)
Best of luck to your friend.
superman211 12:15AM (3/18/2009)
Well buy a used car. If you can't be sure about paying off a new one, get a used one! It's not rocket science to live within your means! Financing should be for things that you need and can't afford like houses and business loans, not cars and boats. When people can just buy used ones.
Aprime 5:54PM (3/17/2009)
I admit being one of those people, one of my account-to-account transfers wasn't made as usual and now I've got a semi-late payment (they'll try getting the funds again in a week).
I should watch my stuff more.
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UH2L 5:56PM (3/17/2009)
I predict that just like with houses, all these car/truck repos will begin to flood the used car market and lead to a decline in used car values. I think now is the time to trade-in and buy something new if you can afford it and your job is relatively stable. The rebates are good, dealers need used cars since they're getting few in on trade for new cars and interest rates are low.
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montoym 7:49PM (3/17/2009)
I really appreciate AB adding in this statement,
- "While glancing at the Detroit News headline would lead most to think delinquencies are now in double-digits nationwide, the actual default rate has risen to just .86 percent (up from .79 percent) – yeah, less than 1 percent (as optimists at Autoblog, we like to applaud the more than 99 percent of customers who are able to pay on time)." -
So many people get caught up in the headline and fail to notice the big picture. Same is true of home forclosures. 90+% of people are still making their mortgage payments just fine despite what you'd think by reading the news.
But, I guess if you don't sesationalize it, it's just not news.
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