Auto Delinquency Rate Up 8.9 Percent in 2008

Last year, the number of Americans who bought a car using an auto loan and failed to pay back the debt to the bank was bigger when compared to the previous year.

The auto  delinquency rate rose 8.9 percent in the fourth quarter of last year in comparison with 2007, the Detroit News has learned citing the credit reporting agency TransUnion.

Quite obviously, the logical explanation for the results is the financial crisis that interfered in people's plans.

"Certainly the overall economy, the weak labor markets, disposable income, are all affecting auto debts as well," said Peter Turek, automotive vice president in TransUnion's financial services group.

According to the credit reporting agency TransUnion, in 2008, average auto debt dropped by 0.2 percent to $12,713 versus the previous year. Nevada continued to be the state with the highest average auto debt of $15,225. Then, it came Texas with $14,848 and on the third place, Nebraska with $10,685.

Highest auto delinquencies were recorded in Mississippi, at 1.62 percent, California, at 1.46 percent, and Louisiana, at 1.37 percent. Alaska, North Dakota and Wyoming were the states with the lowest auto-loan delinquency rates.

What's more alarming is that experts are forecasting a rise to 1.13 percent  in auto delinquencies rate by the end of this year. This might be the highest rate in the last 10 years since TransUnion started tracking statistics.

"There's continued pressure on consumers in managing their debt burden," he said. "The overall economy, the weak labor market and disposable income will continue to plague them as they try to deleverage. The forecast clearly shows there's still an increase looming out there," he added.

The more debts people will have, the less cars they will buy. The less cars customers will buy, the less automakers will sell. So, there's a bright future ahead...
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