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Annual TransUnion Report Paints A Rosy Picture
Every year the credit reporting agency TransUnion releases a report that is meant to forecast auto loans and delinquency rates going into the year. This years projections for 2013 seem to be quite rosy.
According to the report, auto loan delinquencies will continue on pace at near record lows during 2013. The projections are based on the assumption that the national economy will recover at its current pace. To be clear, TransUnion defines the delinquencies in this report as loan that are 60 days or more past due.
The national rate for auto delinquencies hit a near historical high of 0.86 percent during the final quarter of 2008 when the financial meltdown was in full effect. The current rates have dropped by more than half to 0.36 percent. The report indicates that, at most, the delinquency rate may increase to 0.37 percent nationwide. In a press release, Peter Turek, TransUnion’s vice president for its automotive financial services business unit said, ”Macroeconomic factors such as the improving unemployment rate, median household income, and housing prices are some of the primary drivers that lead us to a favorable forecast.”
What does this mean for you and I? When delinquency rates are low, banks have a habit of relaxing their lending standards. That makes a larger amount of cash available to a wider variety of credit scores.
The report does make the assumption that Congress and the President will not haggle too long about the debt-ceiling or protract the next debate about a fiscal cliff. An extended round of in-fighting and bickering on either topic could through the economy into a spin, even if it is a temporary one.
Author: Jerry Coffey
WebsiteJerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.
5 Comments
Let’s hope that the banks don’t get too relaxed with their lending standards. That is what got us into the problem in the first place.
Banks are looking further into alternative credit data sources in addition to traditional credit reports. In time, this should give banks the edge they need to make educated decisions at rates consumers can manage.
That is very true. You can have your household bills reported if the company is willing to do so. For some, this increases the length of their credit history and shows an extended habit of making payments on time.
There is a fine line between relaxed lending requirements and responsible lending for sure Grayson.
I am with Grayson in hoping it does not mean that lending requirements will be relaxed. However, we have shown a terrible record of forgetting the past…
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