Hawai'i's automobile loan delinquency rate had the steepest decline of any state during the first quarter as loan failure rates experienced a noteworthy drop.

An analysis by TransUnion LLC found Hawai'i's rate for auto loans that are 60 days delinquent fell by 42 percent during the January-March period from the end of 2007. At the same time, the amount owed on the loans declined.

The sharp decline in Hawai'i and nationally comes after rates spiked late last year along with worries about home foreclosures in the wake of the subprime mortgage crisis. Locally, some companies that repossess vehicles for lenders reported they had more business than they could handle, while other American Bankers Association data showed auto loan delinquencies were reaching 16-year highs.

Peter Turek, automotive vice president in TransUnion's financial services group, said delinquencies nationwide had a spike at the end of last year, rising to 0.79 percent nationally.

He said the quarter-over-quarter decline appears to have occurred after auto lenders tightened loan practices. That includes stiffer criteria for loans and cutting the amount of time to contact borrowers who've missed a payment.

Instead of waiting 15 days, they may now wait six or eight days before sending a letter or making a call. Turek said consumers also were faster this year in filing tax returns and getting bigger refunds, perhaps contributing to the improved delinquency rate.

"That's really what we believe is driving the sharper decrease," Turek said.

Hawai'i's loan delinquency rate dropped from 1.03 percent in the fourth quarter to 0.6 percent in the first quarter, with the state tied with Massachusetts for the 23rd-highest rate in the country.

Nationally, the ratio of borrowers who are two months' delinquent went from 0.79 percent to 0.65 percent. The average balance on U.S. auto loans was $12,833 in the first quarter.

Hawai'i's average auto loan balance was $14,909, or sixth-highest in the nation. Hawai'i automobile dealers have said their sales are declining this year as the state's economy slows.

Turek said he forecasts that the national delinquency rate will creep up from the first quarter number, gradually rising through the rest of the year. He is projecting it will hit 0.75 percent by the end of the year.

TransUnion's analysis was performed using its credit agency database of 27 million anonymous consumer records that were randomly sampled.