TransUnion Payment Hierarchy Study Finds Consumers Paying Auto Loans Before Credit Cards and Mortgages

The TransUnion analysis looked at a sample of approximately 4 million consumers in each quarter of 2011 that had at least one open auto loan and one open bankcard and one open mortgage. The study found in each quarter that there was a clear preference for remaining current on auto loans, ahead of credit cards and mortgages. Specifically, of the consumers who were delinquent on any of these products:

  • 9.5% were delinquent on an auto loan while current on their credit cards and mortgages
  • 17.3% were delinquent on a credit card while current on their auto loans and mortgages
  • 39.1% were delinquent on a mortgage while current on their auto loans and credit cards

“In other words, the auto loan is seldom the first choice when a consumer has to decide which payment to miss. A few reasons why auto loans have become the preferred payment to make include the need for an auto to get to work or look for employment, and the fact that an auto loan is not a revolving loan — the impact of repossession is greater than the loss of a credit card,” added Becker. “In addition, consumers may have equity in their autos after several years of payments that they are looking to preserve — which is no longer the case for most homes. In fact, negative equity has become increasingly common for homes, which may further contribute to the shift in payment preference to auto loans.”

Full report here…