Auto loan delinquency rates rise in Alaska since recession began

Auto loan delinquencies in Alaska tend to track well below the national average, but that's changing, with borrowers here falling behind in their car payments at considerably higher rates since the recession began two years ago, according to the credit reporting agency Equifax.

The rate of "severe delinquencies," the term for loans at least 60 days overdue, rose fastest among borrowers with the weakest credit scores. By the middle of 2017, lenders appeared to have responded by tightening their underwriting standards, Gunnar Blix, deputy chief economist at Equifax, told Alaska Dispatch News.

Auto loans to borrowers with low or no credit scores are known as "deep subprime," and make up a very small percentage, about 2.5 percent or $70.7 million, of the Alaska market.

The average rate of severe delinquencies among deep subprime borrowers in Alaska rose to 7 percent in June, up from 4 percent in June 2015, just before the recession began, according to Equifax. The agency, based in Atlanta, provided data on Alaska auto loans following a request by Alaska Dispatch News.

Blix called the increase "considerable," and noted that Alaska is now above the national average for deep subprime auto loan delinquencies.

"I'm not sure I'd say it's 'dramatic,' " Blix wrote in a follow-up email. "But it is not normal or unimportant, either."

Auto loan delinquency rates in Alaska have consistently run below national averages since 2008, according to the Equifax data. Among all classes of borrowers, late-payment rates on autos have risen to closely track or exceed averages for the rest of the country.


Subprime loans, made to those whose credit is better, but not optimal, make up 17 percent of Alaska's auto loan market by value. The remainder are "prime" loans, made to borrowers with solid credit scores.

Delinquency rates among subprime and prime borrowers have also ticked up, albeit to a lesser degree, since the start of the recession.

The great recession in the Lower 48 was sparked by the collapse of subprime housing loans starting in 2007. Alaska's recession, sparked by low oil prices and a deep state budget deficit, began during the latter half of 2015.

Jeannette Lee Falsey

Jeannette Lee Falsey is a former reporter for Alaska Dispatch News. She left the ADN in 2017.