Surprise! Auto-loan delinquencies decline

Auto loan delinquencies fell in the third quarter from a year earlier, extending a streak that goes back to the fourth quarter of 2009, according to Experian Automotive.

The decline is good news for dealers -- lower delinquencies encourage lenders to make loans easier to get -- and a surprise to industry credit experts.

"From a year-over-year standpoint, we're still seeing very low delinquencies," said Melinda Zabritski, Experian's director of automotive lending. "I was almost anticipating them to creep up in Q3, year-over-year."

Another credit bureau, TransUnion, had similar expectations, based on second-quarter results.

Year-over-year improvements in auto delinquencies are shrinking as lenders make more subprime auto loans.

According to Experian, 30-day delinquencies on auto loans averaged about 2.7 percent of outstanding loans in the third quarter, down from 2.8 percent a year ago, about a 4 percent decline. A year earlier, 30-day delinquencies were down about 7 percent.

Independent finance companies -- which typically specialize in subprime loans -- had a slight uptick in delinquencies, according to Experian. Independent finance companies had 5.49 percent 30-day delinquencies in the third quarter, up from 5.47 percent a year earlier, the credit bureau said. Delinquencies for 60-plus days followed a similar pattern.

Zabritski said she was impressed the increase was so slight.

"Finance companies by risk type, most of their financing really is in subprime. In fact, they are very heavy in deep subprime. It's not unusual at all to see that increase for them," she said. "It's up, but it's low for them, too."