Auto Loan Delinquency Rate Nears Record Low at Year’s End
As 2012 came to a close, Americans became better about paying their auto loans on time.
According to TransUnion, the national auto loan delinquency rate ended last year at 0.41 percent, up from 0.38 percent in the third quarter but down five basis points from a year ago at the same time.
The majority of states saw a year-over-year decline in delinquencies, with just 14 states seeing increases. On a quarterly-basis, 28 states saw jumps in their delinquency rates.
While the national delinquency rate was near an all-time low, the amount of auto debt per borrower jumped for the seventh consecutive quarter. At the end of the year, the average borrower had $13,747 in auto debt, a 5.4 percent year-over-year increase.
"As expected auto loan delinquencies rose slightly in the fourth quarter, though they remain near the all-time record low set in the second quarter of 2012," said Peter Turek, automotive vice president in TransUnion's financial services business unit. "We continue to see increasing auto debt per borrower as the new and used car sales market remains relatively strong."
With borrowers taking on more auto debt, there is always the chance of getting into financial trouble.
Tips for getting out of debt
Anyone who has been in trouble with debt before knows it is not a fun experience. However, there are ways that you can improve your financial situation.
– Seek help: As soon as you become engulfed with debt, don't be afraid to seek help. Credit counseling services are available to help you develop a plan to get out debt, so take advantage of them.
– Consolidate: If you have more than one debt account, consolidating could be a good option. This can allow you to get a better rate on your debt, which will limit the amount of interest you pay. Additionally, it creates a single payment, which is much more convenient than having multiple accounts to pay each month.
– Lower your interest rates: Although nothing is guaranteed, by calling your lender you could potentially save on interest. Simply asking them to lower your rate could lead to significant savings.
– Stop using your credit cards: Accumulating debt on your plastic is one of the easiest ways to get in trouble, as all you need to do is swipe your card. To help avoid any further credit card debt, stop using them until your financial situation improves.