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Isles' late auto payments soar


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POSTED: Wednesday, December 02, 2009

Hawaii drivers are falling further behind on their auto loan payments as the state's sluggish economy, increased foreclosures and rising unemployment continue to siphon more of people's income.

The state's auto delinquency rate — the rate at which payments fell behind 60 days or more — soared 40.5 percent to 1.18 percent in the third quarter from 0.84 percent in the second quarter, and jumped an even greater 59.5 percent from 0.74 percent in the third quarter of 2008, according to data released yesterday by credit reporting agency TransUnion.

               

     

 

RUNNING OUT OF GAS

        The percent of auto borrowers currently 60 days or more past due at the end of the third quarter:
       

                                                                                                                                                                                                                                                                                                                                                                                                   
1. Mississippi1.53%
2. California1.33%
3. Alabama1.27%
4. Louisiana1.21%
5. Hawaii1.18%
U.S.0.81%

       

       

The average balance of active auto borrowers at the end of the third quarter:

                                                                                                                                                                                                                                                                                                                                                                                                                                                               
1. Nevada$14,721
2. Texas$14,425
3. Louisiana$14,334
4. Washington, D.C.$14,218
5. Arizona$14.192
7. Hawaii$14,050
U.S.$12,542

       

       

Source: TransUnion

       

Hawaii ranked fifth nationally out of 50 states and Washington, D.C., and was considerably worse than the 22nd ranking it had year ago. The U.S. delinquency rate last quarter was 0.81 percent, slightly up from 0.80 percent in the third quarter of 2008.

“;What we're seeing in Hawaii is 'burn-in,'”; said Paul Brewbaker, of TZ Economics. “;The states with the greatest toxicity in credit delinquency already have burned through most of their credit problems, and Hawaii is in kind of a catch-up situation and its problems are still burning in.”;

Peter Turek, automotive vice president in TransUnion's financial services group, said it's common for late payments to rise as the year progresses. Borrowers tend to fall behind as they focus on other spending, often getting back on track in the first and second quarters, when they can use income tax returns to bring their payments current, he said.

Car loan payments that are 60 days or more late are considered a precursor to default because of the difficulty consumers face in getting caught up. TransUnion culls its data from about 27 million individual credit files in its database.

Hawaii also ranked seventh nationally among highest active auto balances at $14,050, but that was better than a year ago when Hawaii was fourth at $15,112.

Turek said loans taken out as part of this summer's Cash for Clunkers program had not started to appear on most credit reports when the quarter ended. As those new loans show up on credit files, there is a good possibility average auto debt will increase.

But since lenders offered loans only to stronger applicants, those loans are less likely to end up delinquent, he said.

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The Associated Press contributed to this story.