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Do Recent Auto Loan Delinquency Rates Overstate Borrower Distress?
Headlines about record-high auto loan delinquencies paint a worrying picture of American consumers under increasing financial strain. But how much of that picture reflects a genuine increase in distress — and how much reflects how we measure it? After considering several possible explanations, we focus on deconstructing the severe delinquency rate — the number of auto loans that are 60 or more days delinquent — to better understand what is driving the increase in this rate. We find that while the stock of severe auto delinquencies is rising, the flow of new delinquencies into this stage ...