Late-payment rate on US auto loans rose in 4Q

LOS ANGELES (AP) -- U.S. car owners are carrying higher auto loan balances but still making timely monthly payments.

Auto loan debt per borrower grew 4.4 percent to $16,769 in the final quarter of 2013 from a year earlier — the 11th consecutive quarter to post an annual increase, according to data released Tuesday by credit reporting agency TransUnion.

Even so, the U.S. auto loan delinquency rate ended the last three months of last year at 1.14 percent, below the 1.3 percent average quarterly late-payment rate for every October-December quarter going back to 2007, the firm said.

The trend suggests borrowers with auto loans continue to keep up with payments, even as auto loan debt per borrower has grown steadily. It's up 12 percent since the first quarter of 2011.

Stable fuel prices, low interest rates and the increased availability of credit helped propel U.S. new car and truck sales up 8 percent to 15.6 million last year. That was the industry's best year since 2007 and the fourth year in a row sales increased by more than 1 million. New auto loans tend to have higher balances early on, which helps drive up auto loan debt.

Auto loan debt per borrower edged up in the fourth quarter by 0.5 percent from the previous three months. The increase was broad, with every state posting a bump in auto loan debt per borrower in the quarter, TransUnion said.

"Consumers are willing to take on more auto debt," said Pete Turek, vice president of automotive at TransUnion's financial services business unit.

Typically, the late-payment rate on auto loans, credit cards and mortgages rises in the October-December quarter, as many consumers hit the stores to buy gifts for the holiday season. The shopping sprees bust some consumers' budgets, forcing them to put off making timely payments.

That seasonal trend also drove up the late-payment rate on auto loans in the last three months of 2013.

The rate of U.S. auto loan payments late by 60 days or more grew to 1.14 percent in the October-December period, rising from 1.04 percent in the previous quarter and 1.09 percent in the fourth quarter of 2012, TransUnion said.

The late-payment rate among subprime borrowers, or those whom lenders deem a higher credit risk because of their track record of managing debt, rose to 6.1 percent in the fourth quarter from 5.7 percent in the prior-year period.

Many borrowers typically catch up in the first few months following the holidays, often with the aid of income tax refunds. That's one reason TransUnion predicts auto loan delinquency will decline to 1.02 percent for the January-March quarter.

All told, TransUnion tracked 60.5 million auto loan accounts in the fourth quarter, up from 57 million a year earlier.

As more drivers have gone car shopping, lenders have responded, making loans available to more borrowers, even those with less-than-perfect credit.

The number of new auto loans increased about 11 percent to 6.6 million in the third quarter from a year earlier. The data lag by a quarter, so the latest TransUnion figures cover the July-September period.

Some 32.5 percent of new auto loans issued in the third quarter were made to nonprime borrowers, up from 32.4 percent a year earlier. That's still less than the pre-recession share of nearly 37 percent in the July-September period of 2007, but up from a low of 25.6 percent in the third quarter of 2009.

Non-prime borrowers are defined as those with a score lower than 700 on the VantageScore credit scale, which runs between 501 and 990, with borrowers scoring at 900 or above being considered prime borrowers, or the safest credit bet.