It’s true, new car loan defaults are decreasing! It’s also true it doesn’t take much of a rocket scientist to understand that by tightening down the lending criteria for consumers looking for new auto loans this would be an expected result.

There are some interesting facts.  Taking a look at the 720 credit score plus category FICO reports that in the May to June 2009 period 1 out of every 411 borrowers went 60 days or more past due on their new car loan payment.  During the same time period in 2008, 1 out of 288 fell past due in the second year which is a 43% reduction.

If you look at the same time periods but in the credit score range or 300 to 599 you’ll find almost an 11% 60 day delinquency rate for new car loans during the period ending April 2009 and a huge reduction down to 8% for the same period ending 2010.

At first glance you can say “YEAH” for the credit companies they’ve reduced delinquency!   Well they did certainly tighten down the lending criteria over the last couple of years.  It’s not near as easy to get a car loan or for that matter a mortgage or credit card now as in the past.  But one underlying reason is that many people are much more cautious with their finances.  Many are asking themselves “do I really need that new car or can it wait till next year?”   Many are holding off making bigger ticket purchases over fears of the economy.  Perhaps having been thrown a curve ball over the last couple years people are saying “time out” before jumping into a new debt.

Bottom line, many people by pulling back the reins, working hard to correct credit problems that have popped up over the last couple years are positioning themselves for an improved financial future by building up the savings reserves, paying down debt, and responsibly getting some credit repair done when needed.

So delinquency in the new car department is down.  Some help given to the tighter credit standards but my belief is a huge portion of credit here goes to a more thoughtful and financially prudent consumer.

Keep up the good work!