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.