auto dealer in black and red logo
MenuMENU
SearchSEARCH

S&P/Experian: Concerns About Subprime Auto Bubble ‘Seem to Be Behind Us’

Auto loan defaults fell to a 10-year low in May, squashing concerns about a forming subprime auto loan bubble. But not all consumer credit categories were a picture of health in May.

by Staff
June 20, 2017
S&P/Experian: Concerns About Subprime Auto Bubble ‘Seem to Be Behind Us’

 

3 min to read


NEW YORK — Concerns about a subprime auto finance crisis are no more, at least according to the S&P/Experian Consumer Credit Default Indices. It showed that default rates for auto loans have drifted down in the last four months, but not all consumer credit categories were a picture of health in May.

The composite rate for consumer credit defaults dropped four basis points from April to 0.86%. By segment, auto loan and first mortgage defaults decreased five basis points each from April to 0.85% and 0.64%, respectively. The bank card default rate, however, increased 13 basis points from April to 3.53% — a 48-month high.

"The pictures of auto loans and mortgages are quite different,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “At the beginning of the year there were reports of a sub-prime crisis in auto loans; these concerns seem to be behind us. The first mortgage default rate remains at 1%, lower than the pre-crisis period. Rising home prices and increases in the equity mortgage borrowers have in their home are helping lower default rates.”

Blitzer noted that one factor playing into rising bank card defaults and stable defaults on mortgages and autos are interest rates: about 4% on mortgages and 4.4% on auto loans, compared to 12%-18% on bank card loans.

He added that in the past, default rates began to climb around the same time the growth of bank card credit outstanding began to slow. He noted that year-over-year growth of bank card credit outstanding peaked at 6.8% last November and was at 5.7% in April, the latest figure available. Bank card defaults rose from 2.81% in November to 3.35% in April, and up to 3.53% in May.

When comparing the bank card default rate among the four census divisions, the default rate in the South is considerably higher than the other three census divisions. The East South Central Census Region — comprised of Kentucky, Tennessee, Alabama, and Mississippi — has the highest bank card default rate. As per the Bureau of Labor Statistics, these states have some of the lowest median household income.

"Easy come, easy go: bank cards, where borrowing money requires simply swiping a credit card, are experiencing rising defaults, while defaults on other kinds of consumer credit, which depend on paperwork, are flat or down," said David M. Blitzer, managing director  and chairman of the Index Committee at S&P Dow Jones Indices. "Default rates on bank cards are at the highest level since May 2013.”

Overall, four of the five major cities saw their default rates decrease in the month of May. New York experienced the largest decrease, down nine basis points from April to 1.01%. Los Angeles reported a default rate of 0.66% for May, dropping three basis points from the previous month. Dallas came in at 0.67%, down two basis points from April. Miami was down one basis point from April to 1.29%. At 0.97%, Chicago was the only city reporting a default rate increase of three basis points from the previous month.

Jointly developed by S&P Dow Jones Indices and Experian, the S&P/Experian Consumer Credit Default Indices represent a comprehensive measure of changes in consumer credit defaults. They track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien, and second mortgage lien. For more, visit www.consumercreditindices.standardandpoors.com.

Originally posted on F&I and Showroom

More Dealer Ops

Auto Dealer Today, Dealer Debrief, 07/15/2026, with Lauren Lawrence
Dealer Opsby Lauren LawrenceJuly 15, 2026

Dealer Debrief: Defection Data & EV Updates

In this week's debrief, host Lauren Lawrence discusses how to use defection data to your advantage and the latest on EV sales and charging infrastructure.

Read More →
Two professionals shake hands while exchanging a car key fob beside a vehicle, symbolizing a vehicle sale, lease agreement, or dealership transaction.
SponsoredJuly 8, 2026

How Defection Data is Bridging the Dealership Conversion Gap

Lead volume is flat, cross-shopping is up and brand loyalty is in retreat. As confident sales teams keep losing buyers they thought they had, daily industry sales data is showing dealers exactly where their funnel is breaking and how to fix it without buying a single new lead.

Read More →
Auto Dealer Today, Dealer Debrief, 07/02/2026 with Lauren Lawrence
Dealer Opsby Lauren LawrenceJuly 2, 2026

Dealer Debrief: Where are you losing customers?

In this week's debrief, host Lauren Lawrence discusses the hidden leaks in dealerships where you might be losing customers without even realizing it.

Read More →
Ad Loading...
Auto Dealer Today, Dealer Debrief, 06/25/2026, with Lauren Lawrence
Dealer Opsby Lauren LawrenceJune 26, 2026

Dealer Debrief: Improving Your Inventory Management

In this week's debrief, host Lauren Lawrence covers a new survey that shows what service technicians really want and two launches that could help improve your inventory and vehicle life cycle management.

Read More →
group of people standing in a circle holding puzzle pieces together
Dealer OpsJune 1, 2026

Ladies and Gentlemen, This Is a Dealership: Why the Fundamentals Still Decide Who Wins

A teaching moment by a legendary football coach happens to apply perfectly in the auto retail space. Learn what it is and how to use it to your store’s advantage.

Read More →
Cover image for a BOK Financial report titled “Timing the market: How avoiding volatility entirely can hurt long-term reinsurance program performance.” The image shows several road construction barricades with flashing amber warning lights lined up in a nighttime work zone. Beneath the image, red text explains that avoiding volatility can mean falling behind inflation and missing market rebounds that drive long-term surplus growth. The BOK Financial logo appears at the bottom right.
SponsoredMay 8, 2026

What Market Timing Mistakes Mean for Your Reinsurance Program

When volatility hits, dealer-owned reinsurance programs face a familiar temptation: pull back and wait for calmer waters. New data from BOK Financial shows why that instinct can quietly cost you years of surplus growth.

Read More →
Ad Loading...
two cars on a billboard, No Hidden Fees
ComplianceMay 1, 2026

Dealer Ads and the FTC

The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.

Read More →
Closeup of white car's headlight, front end
Dealer Opsby Hannah MitchellApril 17, 2026

Used Autos Supply Dwindles

The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.

Read More →
hands making protective frame over red car, Risk Reality Check, Be Proactive, Auto Dealer Today logo
Dealer OpsApril 1, 2026

Managing Risk Effectively Through Changing Times

The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.

Read More →
Ad Loading...
Car key, stacks of coins, and a paper car cutout with AutoPayPlus logo, representing auto financing, loan terms, and vehicle affordability trends.
Dealer Opsby StaffMarch 31, 2026

Survey Reveals What Won't Fix What's Breaking Car Sales

AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.

Read More →