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Credit Report Shows Signs of Stability for US Auto Industry

By Faye Mergel
Published: Tuesday, December 15th, 2009

Despite continuing to struggle with the economy, the United States automotive industry has remarkably shown some signs of stability during the third quarter of 2009, according to a recently released analysis by credit report provider Experian.

Credit Report Shows Signs of Stability for US Auto Industry Although 30-day delinquencies have been steadily rising and still continue to rise, it has significantly slowed down last quarter. Delinquency rate for the third quarter of 2008 to third quarter of 2009 went up by 5.8 percent, a more modest decline compared to this same period between 2007 and 2008 when 30-day delinquencies went up by 9.5 percent. Delinquency rate for the third quarter of 2008 was 3.14 percent while making a modest increase during this year’s third quarter at 3.32 percent.

Scott Waldron of Experian Automotive, says they are seeing a good sign of stability for the automotive lending industry and it could lead to permanent improvements in the long run. Delinquency rates have gone down significantly since creditors have increased their lending standards and have been more picky on who they lend to. Waldron adds that loan providers are now in a better position to help the US automotive industry.

Specialists note that creditors have become more mindful of the credit report and scores of consumers. As of last quarter, average ratings for consumers who applied for new vehicle loans was 775, a relatively huge increase from the 762 average during this same quarter in 2008.

Average rating for consumers who bought second hand vehicles during this year’s third quarter was also up at 684, compared to their 2008 average of 670. Additionally, average new vehicle loan went down to 62 weeks during the third quarter of 2009. They averaged at 63 weeks during the third quarter of 2008.

Industry specialist, Melinda Zabritski, says the higher-than-usual delinquency rates are still around, but the fact that their increase has slowed down is good news for an industry that has not have much of it lately. She adds that the slowing rates of delinquency shows a positive sign for the US auto market, along with other trends the industry is seeing.

The credit report also shows that the 60-day delinquencies went up by 13.4 percent over a year between 2009’s and 2008’s third quarter. Despite this seemingly huge increase, many car dealers are not yet showing signs of alarm since 60-day delinquencies only make up 0.95 percent of all auto loans.

Experts are positive that 2010 will be a better year compared to 2008, when the auto industry was hit by a crisis it has not seen for decades.

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