An automotive credit report for Q4 2012 found that 60-day delinquencies rose from 0.72% in Q4 2011 to 0.74%. Finance companies, typically lenders for “credit-challenged” customers, saw 30-day delinquencies rise from 5.35% in Q4 2011 to 5.61% in Q4 2012.
It was the first time since the end of 2009 that either 30- or 60-day loan delinquencies increased year-over-year. In what could be an early warning sign that sub-prime loans from finance companies are becoming too speculative, the total balance of 60-day delinquent loans grew from $3.48 billion in Q4 2011 to $3.93 billion in Q4 2012. However, from the standpoint of growth as percentage of the total market, 60-day delinquent loans grew from 0.53% in Q4 2011 to 0.55% in Q4 2012.
The bankruptcy of GMAC in 2009, now Ally Financial, cost taxpayers dearly. The U.S. Treasury currently holds about 74% of Ally common equity, and $5.9 billion in mandatory convertible preferred securities, which have a dividend rate of 9%, after a more than a $17 billion bailout. Ally has repaid Treasury $5.8 billion thus far, and looks good for the balance if the economy does not collapse again. Ally leads all auto lending firms because the taxpayer-owned company extended credit on 1.5 million new and used vehicles through franchised and independent dealers last year.
“Overall, our Q4 analysis shows that the auto lending market is extremely healthy,” claimed Melinda Zabritski, director of automotive credit for Experian Automotive, the source of the data.
“Of course, you never want to see an increase in delinquencies, but when you take a step back and look at the market compared to where it was three years ago, we still have remarkable stability.”
She does have a point. Overall, the lending market remains stable compared to Q4 2009. Sixty-day delinquencies are down in comparison from 0.94% to 0.74 in Q4 2012, while 30-day delinquencies are down from 3.30 to 2.72% in Q4 2012.
In other findings:
- Quarterly repossession rates fell 27.6%, going from 0.63% in Q4 2011 to 0.46% in Q4 2012.
- Quarterly repossession rates for banks, credit unions, automaker captive companies, and finance companies all fell, with finance companies showing the sharpest decline (34.7%), dropping from 2.47% in Q4 2011 to 1.61% in Q4 2012.
- Overall, charge-off amounts, however, rose from $6,815 in Q4 2011 to $7,277 in Q4 2012. This is below pre-recession levels ($8,660 in Q4 2007).
