S&P and Experian: Consumer Auto Loan Default Rates Stable

October’s auto-loan default rate was 1.14%. That’s one basis point lower than the September rate of 1.15% and the same as October 2012 which also stood at 1.14% according to S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices.

The comprehensive measure of changes in key consumer credit defaults, including bank cards, mortgages and auto loans, showed stability during the past month. The overall national composite was 1.38% in October- the same as September.

“Things are good in terms of how consumers are taking out loans to buy cars, the data suggests they are paying them off when they’re supposed to pay them off,” David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices told Auto Finance News.

Across all the categories he said he’s seeing default rates back at levels seen in 2003 and 2004.

Blitzer said if one looks at other data from the Fed, primarily the debt service rate, it shows consumers have increasingly repaired their balance sheets.

However, he said he doesn’t have data that shows exactly how many lenders are playing in the increasingly competitive subprime space. But, he said his sense is that as the quality of borrowers goes down, so too does the default rate usually trend up.

“I know that in the past, if car sales began to soften, the auto companies would use their captives to beef up sales, hopefully the auto companies learned that’s not a good long term strategy,” said Blitzer.