CHICAGO, Il. - For the second consecutive quarter, the national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) hit its lowest level since TransUnion began tracking the data in 1999. Auto loan delinquency rates in Q2 2012 dropped to 0.33%, down from 0.36% Q1 2012. On a year-over-year basis, auto loan delinquencies declined 25% from 0.44% in Q2 2011.

"It's not surprising that auto loan delinquencies remain at record low levels," said Peter Turek, automotive vice president in TransUnion's financial services business unit. "A recent TransUnion study found that consumers now value their auto loans more than their credit cards and mortgages. This is partly due to the need for transportation to get to work or to seek employment in a difficult job market. Additionally, consumers with car loans have more equity in their vehicle than they have in the recent past because of the strong used car vehicle market. Consumers want to keep their auto loan relationships in good standing."

In addition to increased demand in new and used autos, bank auto debt per borrower has risen nearly 6% from $12,689 in Q2 2011 to $13,427 in Q2 2012. Despite growing bank auto debt, the majority of states and cities are experiencing declines in their auto loan delinquency rates.

Between Q1 2012 and Q2 2012, 37 states experienced declines in their auto delinquency rates. On a more granular level, 58% of metropolitan areas saw decreases in their auto delinquency rates in Q2 2012. This is down from the prior period where 66% of MSAs experienced decreases.

"It's impressive to see auto loan delinquencies remain so low despite a growing proportion of new loans going to non-prime consumers," added Turek.

In Q2 2012 on a year-over-year basis, the percentage of new auto loans to non-prime borrowers (with a VantageScore credit score lower than 700 on a scale of 501-990) increased by 9%. In the last two years (between Q2 2010 and Q2 2012), the percentage of new auto loans to non-prime borrowers has increased more than 20%.

"With the increase in non-prime borrowing, we do anticipate that auto loan delinquencies will begin to increase," said Turek. "We are at such a low auto loan delinquency level - far from normal standards - that a slight rise through the end of the year should be expected, though the overall rate will likely remain relatively low."