After the government declared COVID-19 a pandemic, auto lenders began offering hardship accommodations to keep consumers current in their loans.

Millions of borrowers took advantage of these financial hardship offers, which allowed them to postpone auto loan payments. The number of borrowers seeking these accommodations peaked in May 2020 then began to drop off. The accommodations caused delinquency and charge-off rates to fall.

Many lenders worried these deferments would introduce great risk into the financial market. But a study by TransUnion finds that most of these accounts remain current and paid up to date showing that the economic impact on auto loans was not as great as feared.

Major auto lender, Ally Financial, offers a prime example of the actual impacts of these hardship programs. The lender reported that COVID-19 assistance peaked in May 2020 at 30% (or 1.3 million) of its consumer auto accounts. After deferments expired in Sept. 30, 2020, just 8% of the loans were delinquent or charged off, and only 3% of consumers extended their hardship accommodations. And 89% of loans were current or paid in full.

TransUnion reports that 80% of prime-risk consumers and 70% of subprime credit consumers made payments on hardship accounts while enrolled. And over 40% of accounts participating in these programs exited within three months.

Nationwide, 7.04% of auto loan accounts entered hardship status by May 2020, up from 0.64% in March 2020.

Though 2.09% of loans remain in hardship status as of May 2021, Matt Komos, vice president of research and consulting at TransUnion told Forbes in an interview, the percentage continues to fall and is a fraction of what it was a year ago. 

Komos predicted numbers will return to pre-pandemic levels. He cited some areas still have high unemployment and predicted that once employment returns to normal levels in those regions fewer people will take part in the programs. 

Many more consumers have exited the programs and haven’t returned, he told Forbes. The research highlights those borrowers that postponed their payments likely did so to reduce their risk rather than because of economic necessity.