While default rates for first mortgages and credit cars increased in the month of November, the default rates for auto loans, including 2nd chance car loans, actually decreased. Auto default rates are the rate at which consumers bail out on their auto loans and choose to let the vehicle be repossessed. Actual numbers boiled down as follows:
• Auto default rate dropped from 1.22% in October to 1.17% in November
• Credit card default rose from 4.85% in October to 4.91% in November.
• Mortgage loan defaults rose from 2.08% to 2.17% over the same time period.
Industry observers wonder there is a change in consumer habits being reflected here. In the most recent recession, more people were willing to let go of their house—but keep the car—because it was needed to get to or look for work. Other possible causes include mortgages way beyond the borrower’s ability to pay back.