3Q auto-loan delinquency rate jumps 15.9 percent

NEW YORK - The percentage of auto loans that were past due 60 days or more rose 15.9 percent in the third quarter compared to last year, according to credit reporting agency TransUnion.

The rate rose to 0.80 percent of outstanding loans, from 0.69 percent in 2007's third quarter.

Delinquencies shot up 17.6 percent from the second quarter of 2008, when they stood at 0.68 percent of outstanding loans. And TransUnion expects even more people to have trouble paying their auto loans, projecting the rate will rise another 10 percent by the end of the year, to 0.88 percent of outstanding loans. And the rate is likely to top 1 percent early in 2009.

Like credit card delinquency rates, the number of people falling behind on paying their auto loans tends to be cyclical, said TransUnion officials say. But the fourth quarter is typically the least problematic.

Ezra Becker, principal consultant in TransUnion's financial services group, said the unusual rise reflects the broader troubles in the economy, the same way spikes in credit card and mortgage delinquencies do. "These numbers are significant in that they are historical highs," he said, noting that the trend since the end of 2006 has been upward. Auto loan delinquencies haven't been above 1 percent since early in 2001.

While some people might be holding off payments on their auto loans in a mistaken belief that they won't have to pay if the auto companies go belly up, Becker said that is likely adding very little to the overall delinquency rate.

Delinquencies were highest in Mississippi at 1.46 percent, and Louisiana, at 1.41 percent. California, Alabama, Florida, Tennessee, Arizona and Georgia all had rates over 1 percent.

The states with the lowest auto-loan delinquency rates were Wyoming, at 0.29 percent, North Dakota, at 0.36 percent and South Dakota, at 0.46 percent.

Average auto debt also increased for the third quarter, up about 1 percent to $12,861, from $12,722 in the year-ago quarter. Average debt was basically flat from the 2008 second quarter, average when it stood at $12,869.

Nevada had the highest average auto loan, at $15,774, followed by Washington D.C. at $15,433. The lowest average was in Nebraska, at $10,944.

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