During the final quarter of 2012, a time period during which borrowers tend to push debt payments back for holiday spending, fewer Americans fell behind on their auto loan obligations. According to credit reporting agency TransUnion, the car loan late-payment rate decreased on an annual level and stayed near a decade low point.
“Consumers are valuing their auto-related loans a little more ahead of other things when they do get a little bit stretched in their budgets,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit.
Auto loans with late payments beyond 60 days was 0.41% in 3Q12, an increase from the 0.38 from the previous quarter, but down the 0.46% seen earlier in the year, found TransUnion data. A record low, according to company data that stretches back to 1999, was the 0.33% from 2Q12.
U.S. auto sales grew 13.5% last year to reach 14.5 million, and analysts anticipate that a million more units will be sold this year as more consumers continue to replace their aging vehicles.
Why would partnering with a bank (the third option) be any different than working with Ally, which is already a bank?
Perhaps consumers are becoming more alert to the fact that our government leaders are looking for continued slow economic growth and continued declining personal incomes instead of a more robust traditional rebound in order to promote social change policies with a narrowing of the standard of living between the US and other nations (quick – how many Europeans have 2+ cars per family). In auto late-payment terms, it is a heightened perception that the bank policies are “Pay or Walk” ;and, job churn may require a car to get to the next job opportunity. Additionally, tight auto loan lending standards in place during the last few years allowed loans to fewer sub-prime borrowers. Improved credit quality reflects lower late-payments. Sub-prime borrowers face higher used car prices and tougher credit standards therefore their standard of living via travel may migrate to higher mileage lower cost vehicles —at least until food stamps are accepted in lieu of cash for the auto payment (this last part is meant to be a macabre joke folks).
Has anybody done a direct behavioral score correlation between government assistance recipients and auto credit quality?