NEW YORK (MainStreet) Far and away, American car owners are taking care of business when it comes to their new car loans. In fact, data shows a 22% improvement in auto loan delinquency rates.
What's behind the improved numbers?
It’s certainly not an overall trend in paying down consumer debt. According to a recent study from Card Hub, U.S. credit cardholders added almost $48 billion in new card debt in 2011.
Clearly, from a credit card perspective, Americans are going backward on debt.
But that’s not true for debt related to their auto vehicles. New data out from TransUnion, the Chicago-based credit ratings firm, says the national auto delinquency rate (which TransUnion describes as the rate of borrowers 60 days or more past due on their auto loans) has fallen for the ninth-consecutive quarter.
The national rate was already low, at 0.59% in the fourth quarter of 2010. But the new rate from a year later – 0.46% - shows that Americans are doing a masterful job of keeping up with their car and truck payments.
TransUnion adds that the fourth quarter of 2011 didn’t show any upward spikes in auto loan debts. That’s another good sign, as the fourth quarter of any year is usually the worst quarter for car consumers, according to TransUnion.
"Normally there is a seasonal upswing in auto delinquency rates in the fourth quarter,” explains Peter Turek, automotive vice president in TransUnion's financial services business unit, in a statement. "Ending the year flat is particularly interesting, because the number of new auto loans coming onto the books has consistently increased since the end of the recession, a primary driver of which has been an expansion in lending to consumers in the sub-prime market."
TransUnion saw lower delinquency rates for urban vehicle owners as well – 54% saw a rise in delinquencies in the third quarter, but only 44% in the fourth quarter of 2011.
Apparently, consumers have their cars and trucks on a financial pedestal, and it’s one of the first bills that get paid every month. With America’s love for its vehicles still going strong, that’s a trend TransUnion expects to continue.
"National auto delinquency rates continue to remain at historic lows, and are likely to stay there as demand for both new and used vehicles continues to be strong," Turek adds. "Even without a robust economic recovery, auto loan delinquencies have remained low, and we anticipate that an improving economy in 2012 will allow delinquencies to stay around their current levels."
Call it prudent personal financial planning, or call it an outlier on debt related to America’s infatuation with cars. What can’t be denied is that when it comes to household bill payments, auto loans are a unique priority.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.