Auto loan delinquencies edged up in the fourth quarter but remained low and should stay low for the time being, credit reporting firm TransUnion says.
The company's findings, released yesterday, bode well for dealerships trying to get subprime customers financed, since low delinquencies encourage auto lenders to stick with easier lending standards.
According to TransUnion, the percentage of auto loans delinquent by 60 or more days in the fourth quarter of 2013 was 1.14 percent, barely above the year-earlier period's 1.09 percent.
"While we observed an uptick in auto loan delinquencies, there are reasons to believe they will continue to remain relatively low in the near future," Pete Turek, vice president of automotive in TransUnion's financial services business unit, said in a statement.
One of those reasons, he said, is that the percentage of higher-risk subprime accounts remains relatively low compared with pre-recession levels.
According to TransUnion, the share of subprime loan originations in the third quarter of 2013, the most recent data available, was about 32.5 percent, up from about 32.4 percent in the 2012 period. In the third quarter of 2007, it was about 37 percent.
TransUnion defines what it calls the "nonprime" category as loans to customers with credit scores lower than 700 on the VantageScore 2.0 scale. That includes the subcategories of nonprime (scores of 641 to 699) and subprime (scores of 640 and below)
"We expect share of non-prime, higher risk loan originations to continue trending upward due to the growth of competitors in this segment," Turek said in a written statement.
In its report, TransUnion also said the average auto loan debt per borrower increased in the fourth quarter to $16,769. It was the 11th straight quarterly rise. Auto debt per borrower hit a recent low of $14,764 in the first quarter of 2010.
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