Delinquencies Plateau as Loan Volume Climbs in 4Q | Auto Finance News | Auto Finance News

Delinquencies Plateau as Loan Volume Climbs in 4Q

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Serious delinquencies — auto loans 60 days or more past due — “plateaued” in the fourth quarter, remaining relatively flat at 1.43% of total outstandings as compared with the prior-year quarter, according to TransUnion’s quarterly Industry Insights Report released yesterday.

“It’s good that it is plateauing,” Brian Landau, senior vice president and auto group leader at TransUnion, told Auto Finance News. “I wouldn’t say that it is necessarily ‘declining’ right now because it is only 1 basis point [lower year over year], but it’s certainly a plateau.”

Last quarter, TransUnion predicted serious delinquencies would rise to 1.46% in the fourth quarter. TransUnion also reported at the time that delinquencies could have a roller coaster year in 2018, with the rate predicted to drop as much as 20 basis points by midyear, before rising again above 2017 levels.

Now, the outlook on delinquencies is more flat, Landau said.

“There is nothing for me to believe delinquencies will go and rise or decline sharply by a few basis points,” he told AFN. “There is no indication from what I’m reading or seeing that any lender is doing anything out of the ordinary, and I haven’t heard systemically that a lot of lenders are doing one or another thing. No one is giving any extraordinary points of view on delinquencies rising or falling, so I think [next quarter] will be fairly the same as what we are seeing now.”

TransUnion also observed an increase in the number of total auto loans — growing to 79.4 million contracts in the fourth quarter, as compared with 75.8 million a year prior, according to yesterday’s report.

“Auto lending is stabilizing after years of rapid growth,” Landau said in the TransUnion report. “These metrics reflect the continuing tightening of underwriting, particularly for prime and below risk tiers. Generally speaking, the auto lending sector is performing well as the economy remains relatively strong.”

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