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Late car payments top ’19 levels, but defaults still lower, says Cox

Late car payments top '19 levels, but defaults still lower, says Cox

Other data indicates that borrowers are paying off delinquent loans.

Equifax found that 2.14 percent of auto loans in the first six months of 2022 were more than 120 days past due on payments, according to Cox Automotive Chief Economist Jonathan Smoke, classing them as in default. However, that was behind the 2.9 percent default rate Equifax reported for the pre-pandemic year 2019, Smoke said.

Smoke said Cox expected 2022 to eventually reach a default rate of 2.3 percent — “one of the lowest levels in the past 15 years.”

Historically, about 80 percent of defaults end in repossessions, and the repossession rate is also likely to be lower in 2022 than it was in 2019, Smoke said. In 2021, 1.1 million vehicles were seized — 32 percent less than in 2019 and 17 percent lower than the 2012-21 average, according to data from Manheim citing Smoke.

“Due to a very low default rate and a smaller proportion of defaults turning into write-backs,” Smoke said, “the probable write-back rate in 2022 is currently, and likely to remain, very low by historical standards.”