The S&P/Experian Consumer Credit Default Indices released through February 2023 shows that the composite rate slightly increased by six basis points to reach 0.75%.

But it's not just the composite rate that's fluctuating - individual categories are seeing changes as well. Auto loan defaults, for example, increased by one basis point to 0.95%, while the bank card default rate saw a more significant jump of 14 basis points to 3.18%. Even first mortgage defaults are on the rise, with an increase of five basis points to 0.53%.

The default rates in the following major metropolitan cities have increased compared to last month. Los Angeles in particular has seen a significant spike, with a whopping 14 basis point increase to 0.54%. Miami also saw a rise of 10 basis points to 0.96%. Dallas and New York also suffered increases, but on a smaller scale of seven and two basis points respectively. Interestingly, despite the trend in most cities, Chicago managed to decrease its rate by three basis points to 0.86%.

Not only does this put pressure on the banks, but it also stifles the dealership’s business by making it more difficult to find loans for your customers. Also, it potentially increases the dealer’s chances of getting sued by a customer. Why? Because more delinquencies most likely means consumers with loans are finding it more difficult to pay their bills, which could mean they are having problems. As people’s cash flow decreases, the opportunity to sue a car dealer to get back their money and some becomes a lot more enticing, making it more likely dealers could expect more lawsuit claims in the near future. What to do? Stay compliant and consult an experienced dealer attorney regarding your business practices and paperwor