Car owners more diligent on making payments

Car owners more diligent on making payments

Auto loan delinquency rates are falling and U.S. motorists are doing a better job of getting auto loan payments in on time.

The auto delinquency rate rose sharply in recent years as the economy worsened, leading to such tight credit requirements for car buyers that it took a nearly perfect credit score to secure a loan.

Recent reports indicate that credit tightening has had the desired effect and delinquency rates are dropping. According to TransUnion, one of the three big credit reporting agencies in the U.S., the late loan payment rate dropped to 0.53% during the second quarter of this year, down from 0.73% during the April – June period in 2009.

As is normal, rates varied widely across the country, from a minimal 0.28% in North Dakota to 1.05% in Mississippi. But, significantly, the delinquency rate rose in only three states, Rhode Island, Utah and Montana.

TransUnions review of 27 million credit records also shows that the number of car loans written during the second quarter rose by about 18.7%, while the actual amount financed increased by $84, to $12,643. Thats less than the inflation rate in the automotive sector and suggests either that buyers are making larger down-payments or were focused on financing vehicles with larger incentives.

TransUnion is predicting that delinquency rates will rise again for the second half of 2010, but that this was to be expected. The industry routinely sees a decline in late loan payments during the first half of the year, while delinquencies are more likely to rise between July and December, especially going into the holiday season, when there are other needs competing for household dollars.