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The rate of late payments on auto loans fell in the third quarter from the 2010 period, but was up slightly from the second quarter as the average size of outstanding auto loans hit a record high.
The increase reflects seasonal patterns more than a sign of trouble brewing, according to credit reporting agency TransUnion.
U.S. consumers were 60 or more days late with their payments on 0.47 percent of auto loans in the June-to-September period, down from 0.58 percent last year. The rate in the 2011 second quarter was 0.44 percent.
Data culled from TransUnion's data base of 27 million consumer records showed that the rate of late payments rose compared with the second quarter in 32 states, while it dropped in 15 states and was unchanged in 3 states.
Even with the uptick, the late payment -- or delinquency -- rate is near the historic low, according to Peter Turek, automotive vice president in TransUnion's financial services business unit. Prior to the recession, the rate typically fluctuated between about 0.55 percent and 0.71 percent.
In the first quarter of 2011, the rate bottomed out at 0.49 percent, the lowest level since TransUnion began tracking the rate in 1999. Late payments peaked at 0.86 percent in the fourth quarter of 2008.
Auto payment delinquencies usually rise in the third quarter, even when the overall trend is heading down.
That reflects several factors, including that most loans are written during the second or third quarter, and new borrowers sometimes have trouble coming up with their payments. "Typically, you really don't see the impact on your household budget until the second or third payment, so if you don't plan for it, you could get a little sticker shock," he said.
The auto loan delinquency rate is staying down despite an increase in the number of new loans being written and their rising dollar amount, Turek said. The average loan outstanding rose during the third quarter to a record $12,902, compared with $12,500 last year, and $12,689 in the second quarter.
The size of the average loan had dropped from a previous high of $12,869 in the second quarter of 2008, in part because lenders pulled back sharply amid the Great Recession. Lending has opened up in the past few months, which is increasing the average balance.
Auto loan delinquencies are lower than the rates for credit card and mortgage payments, which stood at 0.71 percent and 5.88 percent for the third quarter, according to TransUnion. Both showed an uptick from the prior quarter, also reflecting seasonal patterns.
One reason for the difference is that lenders will not wait for missed payments on auto loans to accumulate for more than a few months before repossessing the car. Mortgage foreclosure is a lengthy process, and credit cards are unsecured debt, which means the only recourse a lender has is to shut down the credit card to new charges and try to collect the balance.
With the U.S. economy expected to continue to slowly improve next year, and auto sales forecast to continue rising, TransUnion predicts that auto delinquency will remain at the current low level.