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Fewer car owners fall behind on auto loans

NEW YORK » Hawaii automobile owners are getting better at keeping up on their loan payments.

Auto loan delinquencies in the state fell 46 percent year over year in the first quarter to 0.42 percent of total loans, the seventh-best delinquency rate in the nation and seven percentage points better than the U.S. average, according to Tuesday’s data from TransUnion, one of three nationwide consumer credit reporting companies along with Equifax and Experian.

Still, Hawaii auto owners didn’t hold back on price when financing vehicles. Hawaii had the second-largest average auto debt burden at $14,281, trailing only the District of Columbia at $16,268.

Nationally, late payments on auto loans hit their lowest level last quarter since 1999, providing more data that show consumers have gotten a handle on their debt.

TransUnion said the rate of payments that are 60 days or more past due reached its lowest point since the credit reporting agency began tracking the figure, dropping to 0.49 percent.

The improvement from 0.66 percent a year ago reflects the stronger auto sales market, which was being fed by higher consumer confidence and low interest rates, said Peter Turek, automotive vice president in TransUnion’s financial services business unit. The number of auto loans started during the quarter rose 22 percent from the prior year.

The rate at which auto loan payments fell behind during the recession never reached the heights that credit cards and mortgage payments hit, largely because financed cars are repossessed faster than credit cards are written off or homes are foreclosed.

Nevertheless, all three forms of consumer lending dropped to recent lows for late payments, or delinquency, in the first quarter.

Mississippi, Louisiana and Oklahoma had the highest auto delinquency rates during the quarter, while Montana, Washington, D.C., and Wyoming had the lowest.

"It starts and ends with the consumer; they have to be able to make their payments," Turek said.

TransUnion doesn’t measure demand for specific types of cars, so Turek hesitated to link increased demand to consumers looking for more efficient vehicles as gas prices started to climb. He said gas prices tend to have more of an impact on the specific model an auto shopper chooses, rather than on the shopper’s decision to get a new car.

Low interest rates are likely driving demand higher, he said.

The average amount outstanding on auto loans edged up during the quarter to $12,585, from $12,501 a year ago. The increase reflects the fact that more new loans were extended.

TransUnion expects late payments to continue to drop this year, potentially reaching 0.42 percent or lower. Turek said he expects interest rates to remain low, and possibly even drop further, as demand continues to pick up.

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