The latest release by Experian and Standard and Poor’s (S&P) joint Consumer Credit Default index has revealed that borrowers are defaulting on their car loans at a higher rate than other credit-related financial obligations.
Data from the month of August revealed that defaults on auto loans rose to 2.06 from 1.96 in August, although the August number was still down 23.31 percent. Those figures trended against the average, which factored in bank card and mortgage defaults.
“Except for auto loans, the consumer credit default indices show declining default rates,” said David M. Blitzer, managing director of S&P’s index committee.
The index is a joint development by the two financial institutions and releases data on monthly basis. August’s results show that while borrowers are prioritizing mortgage and credit card payments, they’re still falling behind on car loans.
While consumers with bad credit should know that they are pre-approved for car loans, they need to make sure that their monthly payments are manageable so that they can avoid defaults, which will further damage their credit history. In this sense, it pays to research a wide variety of vehicles in order to get the best deal and secure the lowest monthly payments.