Recent data points to more auto borrowers struggling to keep up with loans, but default rates remain below pre-pandemic levels.

Borrowers who took out auto loans in the second and third quarters of 2020 have kept up with their payments better than pre-pandemic borrowers, according to TransUnion. But auto loans in the second and third quarters of 2021 are starting to show similar delinquency rates as debt from before 2020.

Industry experts suggest “pandemic score migration” may be to blame. Pandemic score mitigation looks like this: a borrower may have been approved as a near prime consumer in 2020, but now behaves more like a subprime consumer.   

Inflation and interest rates can boost delinquencies, but experts say unemployment will have the biggest impact.

Still, other data indicates borrowers are resolving past due loans.

Equifax found 2.14% of auto loans were over 120 days behind on payments in the first six months of 2022, classifying them as in default. However, Equifax reported a 2.9% default rate in 2019. Cox expects 2022 to close at a 2.3% default rates, which is among the lowest level in 15 years.  

Historicaly, 80% of defaults end in repossions. The repossession rate also will likely remain lower in 2022 than in 2019, experts say. Manheim data shows 1.1 million vehicles were repossessed in 2021, down 32% from 2019 levels and 17% from the 2012-21 average