Using data from 27 million anonymous credit files, TransUnion has announced that the number of consumers with outstanding auto loans 60 days or more behind on payments ticked up in the last quarter of 2008.
According to TransUnion, the auto loan delinquency rate was 0.8 percent in the third quarter of 2008 and increased to 0.86 in the fourth quarter.
Experts say that part of the jump in delinquency rates can be attributed to the fact that fewer consumers are taking out auto loans. Because of tightening lending standards and increased scrutiny on credit scores, a number of borrowers are having trouble getting loans based on creditworthiness.
TransUnion says that the current economic conditions and a weak labor market are affecting consumers’ ability to make timely payments, and the credit bureau is unsure how much higher the delinquency rate might rise given economic uncertainty.
On a state-by-state basis, Mississippi and California currently experience the highest auto loan delinquency rate.
With a limited customer base, some automakers are thinking outside the box to attract the few car buyers still in the market.
Earlier this year Hyundai rolled out its Hyundai Assurance program hoping to encourage car buying despite a growing fear of unemployment among its customer base.
The promotion assured customers that if they were to experience job loss or another pre-defined life-changing experience, the car could be returned without impact on their savings account or credit score.
Even retailers are extending risk-free deals to wary consumers. Men’s apparel chain Jos. A. Bank Clothier is offering to refund the price of a suit and let a customer keep the clothing if they lose their job after purchasing the item.
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