US drivers prefer to pay loans on time

• Source: Shanghai Daily
• [09:01 August 31 2010]
• Comments

In another sign that borrowers have taken tighter control of their debt, late payments on auto loans dropped in the second quarter in the United States.

The rate of payments 60 days or more past due dropped to 0.53 percent of outstanding auto loans in the April-June period, from 0.73 percent a year ago, according to credit reporting agency TransUnion.

The drop in the auto loan delinquency rate mirrors declines in late credit card and mortgage payments, according to TransUnion's review of 27 million credit reports in its database. Its records represent about 10 percent of the population with active credit accounts.

Meanwhile, new loans written during the quarter rose 18.7 percent, TransUnion said. And the average size of an auto loan edged up slightly, to $12,643 from $12,560 a year ago.

The change reflects an uptick in car purchases, said Peter Turek, automotive vice president in TransUnion's financial services group. Although the number of new loans hasn't returned to pre-recession levels, he said the increase in originations means that buyers are taking advantage of auto makers' aggressive sales promotions.

"Consumers are very savvy, and they're recognizing good deals when they see them," Turek said. Buyers are also leaning more toward used cars over new cars, he said.

The delinquency rate rose in only three states: Rhode Island, where it reached 0.74 percent; Utah, at 0.71 percent; and Montana, at 0.38 percent. Overall, rates were below the national average in 28 states and Washington, D.C.

"The data definitely supports the fact that lenders are putting lower (numbers of) risky loans on the books," Turek said.