TransUnion issues its annual auto delinquency report which forecasts a rise in the delinquency rate which is not good news for customers who might be hoping to secure a bad credit car loan.
TransUnion forecast
At Auto Net Financial, we see that the TransUnion credit bureau has released its annual report on automotive lending. This particular report is based on information that TransUnion extracts from a database that contains the information from 27 million consumer records that are randomly sampled every quarter. As such, it’s fair to assume that the results are accurate.
The bottom line, according to TransUnion, is that the national auto loan delinquency rate will increase by approximately 7% by the end of this year.
TU analysis
“Our forecast indicates we will see auto loan delinquencies drop in the first and second quarters of 2010 due to many factors such as ‘cash for clunkers’ and tightening lending standards,” said Peter Turek, automotive vice president in TransUnion’s financial services group. “Delinquencies will rise in the second half of 2010 as economic pressures, along with traditional spending patterns of summer vacations, back to school and the holidays, will continue to strain consumers. While the rate of increase should be relatively mild, it is a cautionary number to those expecting an abrupt turnaround in the auto finance industry.”
If this proves to be true, it will be, according to TransUnion, the fifth straight year that the 60-day auto loan delinquency rate has either remained the same or increased from the previous year.
Our take on the results
The essence of the report for those bad credit car loan applicants out there hoping to secure a loan is that fewer new auto loans are currently being arranged. At the same time, that those loans are approved will be subjected to tighter lending standards.
When comparing the auto loan environment year over, this means that, moving forward, an individual with bad credit and a given credit score will be paying a higher interest rate (probably with a shorter loan term) and will be asked to put down a larger down payment in the current credit market versus the same time last year.
Here at Auto Net Financial, our advice to consumers seeking bad credit auto loans hasn’t changed since the beginning of the current economic downturn. This includes:
• Knowing your FICO score and what’s contained in your credit report
• Planning on coming into the loan with at least 10 percent down in cash or trade equity
• Keeping the loan term as short as possible
• Buying a compact or midsize vehicle and putting off looking at your dream car until after you’ve reestablished your credit.
Finding the right dealer
At Auto Net Financial, our business is to help people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. When you decide to buy a car, our credit application can be filled out in the comfort and security of your own home.
For more information, please visit www.autonetfinancial.com to see what we can do for you.
