Lower 2Q Delinquencies Despite Subprime Increase: TransUnion

Despite an increase in subprime auto loans, average delinquencies overall reached the lowest point in two years, according to credit reporting bureau TransUnion.

While subprime share has increased, it’s still below recession levels, said Jason Laky, senior vice president and automotive business leader for TransUnion.

“Subprime or nonprime loans as a percent of all lending are about 18%,” he told Auto Finance News. “It’s grown a little bit, but it’s still not the 23.7% it was in the recession time frame,” he said. That 23.7% was in the third quarter of 2009, TransUnion said.

TransUnion reported on second-quarter results last week. For the second quarter, serious delinquencies accounted for 0.95% of outstanding loans, down from 0.98% a year ago, TransUnion said. That level was the lowest since the second quarter of 2013, when the delinquency rate dropped to 0.86%.

The credit bureau defines serious delinquency as 60 days or more overdue. Beyond that point, lenders commonly write off accounts. For borrowers with subprime credit, TransUnion said the 60-day delinquency rate was 4.98% for the second quarter, down from 5.09% a year ago. TransUnion defines subprime as VantageScore credit scores below 601.

Laky said “super-prime” loans (780 or higher), which have “close to zero delinquency,” more than offset the increase in subprime.