Auto-Loan Delinquencies, Repos Down

Auto-loan delinquencies and repossessions are down, says Melinda Zabritski, Experian Automotive’s director-automotive credit.

“Overall loan portfolios are very strong,” she says, referring to third-quarter 2010 lending performance compared with like-2009. “We’re seeing growth in super prime and prime, and subprime lending is loosening somewhat.”

Thirty- and 60-day delinquencies have dropped 8.43% and 17.39%, respectively.

Less than 3% of outstanding loans are delinquent by 30 days, the lowest level since 2007. It is an 8.4% improvement compared with 2009.

“We’re seeing similar trends for 60-day delinquencies,” Zabritski says, pegging that segment’s outstanding balance at $4 billion, accounting for 0.77% of outstanding auto loans.

“All lenders (by category) are showing strong improvements,” she says at an Experian webinar.

Louisiana leads states with the highest subprime 60-day delinquency rates, followed by Alabama, Georgia, Connecticut and South Carolina.

States with the lowest subprime delinquency rates are Nebraska, Maine, Montana, North Dakota and Alaska, the lowest.

Repossession rates are down from 0.70% in third-quarter 2009 to 0.67% in the same period this year. “It’s really driven by a strong improvement by banks,” Zabritski says. “They’ve decreased their repos 25%.”

New-car financing is down 8.7% to 39.05%, while used-car lending is up 6.5%, accounting for 60.95% of vehicle financing.

Percentage of loans by credit category.

The total loan balance for this year’s third-quarter was $631 billion, down $38 billion. Banks are the biggest lenders, followed by auto makers’ “captive” financing units, credit unions and finance companies.

The average credit score for new-car consumers is 769. That is down six points, but “still high,” Zabritski says.

Used-car consumers’ average credit score is 683, down a point from third-quarter 2009 to third-quarter 2010, but still 13 points higher than two years ago.

Lenders, reluctant in 2009 to finance cars for people with less than stellar credit, are beginning to soften that stance by slightly increasing their non-prime and subprime lending.

But the lion’s share of loans – 62.8% – still go to people with sterling credit histories. Super-prime and prime lending show the highest increases in risk distribution at 3.12% and 3.05%, respectively.

Risk distribution of open auto loans are as follows: 38.2% for super-prime, 24.6% for prime, 15.5% for non-prime, 8.8% for subprime and 12.9% for deep subprime.

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