Despite the highest unemployment rates since the Great Depression, delinquency rates on auto loans were minimal through April, a key factor for stability in automotive production.

“Enhanced unemployment benefits and federal stimulus checks likely played some part in lowering delinquency rates in April.... However, we think the large percentage of borrowers receiving loan modifications during the month was the main driver... Based on our discussions with issuers, we believe borrower modification requests began to level off in April. However, given that most issuers provided borrowers with two to four months of payment relief, we expect portfolio modification rates to remain elevated into the summer months.”

Auto lenders are working with borrowers, offering short-term loan extensions for people who have lost income because of COVID-19. Lenders are not waiting until borrowers nearly default on loans – the bulk of modifications (95% prime, 80% subprime) are coming before a borrower misses a single payment.

Source: Kroll Bond Rating Agency

Late car loan payments

28% April 2020 auto loan payments up to 59 days late for AmeriCredit, the asset-backed security wing of General Motors Financial, a lender to subprime borrowers.

36% March 2020 delinquencies at AmeriCredit. GM Financial led the industry in delinquencies with most prime lenders reporting low single-digit rates for late payers. All major auto lenders noted a significant drop in delinquencies from March to April. Ford Financial’s delinquencies hit nearly 10% in February but were down to about 6% by April.

loan modifications

up to 21% Subprime borrowers who received loan extensions or term changes in April

up to 12% Prime borrowers who received loan extensions or term changes in April