Auto loan delinquency on the rise in Canada, led by Alberta and Saskatchewan

TORONTO—Delinquency rates on auto loans are soaring, pointing to another spillover effect from the slowdown in the oilpatch.

Credit monitoring agency TransUnion says in its latest report that auto loan delinquency rates climbed nearly 10 per cent in the fourth quarter of last year to their worst levels in four years.

The increase was led by higher rates in Alberta and Saskatchewan where workers have been hit directly and indirectly by job losses due to the drop in oil prices.

TransUnion says that nationally, auto loan delinquency rates were 1.32 per cent in the fourth quarter of last year, up from 1.21 per cent the previous year.

However, the auto loan delinquency rate hit 2.66 per cent in Saskatchewan, up from 2.24 per cent year over year.

And Alberta saw a delinquency rate of 2.42 per cent, up from 1.80 per cent in the fourth quarter of 2014.

“This was the largest spike in the national auto loan delinquency rate that we’ve observed in quite some time, but we do think it’s a regional issue,” said Jason Wang, TransUnion’s director of research and analysis in Canada.

“Falling oil prices have led to rising unemployment rates in oil-rich regions. We are now seeing the increase in unemployment in these areas manifest as rising delinquencies across the board, though the greatest impact has been on auto loans.”

Overall, delinquency rates for non-mortgage loans in the fourth quarter were roughly the same at 2.67 per cent, versus 2.66 per cent a year ago.

For Alberta the rate was 2.77 per cent, up from 2.62 per cent, while Saskatchewan rose to 3.01 per cent from 2.92 per cent.

The report also said average non-mortgage debt ticked higher to $21,512 in the final three months of 2015, up from $21,428 a year earlier.

The increase came as debt levels rose for auto loans, credit cards and instalment loans, but decreased for lines of credit.