Iowans and Nebraskans owe less money on their vehicles and are more current on their payments than the national average, but auto loan delinquencies have crept up slightly over the past two years.
Figures from a financial services firm indicate residents of the two states are conservative, keeping vehicles longer, making bigger down payments and not spending as much, said Peter Turek of Detroit, automotive vice president in TransUnion’s financial services group.
“It looks like they’re doing a very good job of managing debt, at least auto loan debt, compared to the national average,” Turek said.
Over the past six months the share of auto loans that are more than 60 days overdue has declined in the states, possibly because of tightened loan standards and stepped-up collection practices by lenders, he said.
The U.S. delinquency average also was down in the latest quarter, although rates nationally and in Nebraska and Iowa are up from early 2006.
TransUnion, which is based in Chicago, computes the figures from about 3 million consumer loan records it receives from lenders. The records do not have the consumers’ names.
For the first quarter this year, Nebraskans’ average auto loan balance was $10,635, which was 49th among the states and just ahead of Michigan. Iowa was 31st at $12,057. The U.S. average was $12,833. Nevada had the highest, $16,034.
A key factor in loan balance is how close borrowers are to paying off loans, Turek said, so Nebraskans may be keeping their cars longer than average before borrowing to buy new ones.
TransUnion said 0.47 percent of auto loans in Nebraska were 60 or more days overdue, 42nd in the country. Iowa’s 0.40 percent delinquent rate ranked 47th. The national average was 0.65 percent overdue.
Louisiana had the highest delinquency rate, 1.19 percent, and North Dakota the lowest, 0.30 percent.
Turek said delinquency rates typically decline in the first quarter of the year. But this year’s decrease was more than twice the average decrease of the previous six first quarters.
Delinquency rates spiked somewhat at the end of 2007, and lenders responded, he said. “They’ve been able to turn that around a little bit.”
For example, lenders might call a consumer five or 10 days after a missed payment, rather than sending a letter. Lenders also may be tightening borrowing standards, meaning more people are able to make their payments.
Turek said the U.S. auto loan delinquency rate may continue to increase in coming quarters, although conservative lending standards and stepped-up collection efforts could bring it back down by the end of this year.
TransUnion reports on 60-day delinquencies because that’s when lenders begin to foresee potential loan losses, he said.