Auto Loan ABS Origination Attributes: Navigating the Next Stretch of the Road

Auto loan ABS credit performance has softened in recent years (see U.S. Auto Loan ABS Indices) as borrowers navigate higher interest rates, persistent inflationary pressures, and elevated vehicle prices (see Figure 1). At the same time, the post-pandemic rebound in origination volumes may have coincided with some easing in select underwriting metrics among certain lenders. Against this backdrop, KBRA examines trends in key auto loan ABS origination metrics—including loan-to-value (LTV), payment-to-income (PTI), annual percentage rate (APR), and original term—to assess how underwriting standards have evolved across originators and borrower credit segments over time.

Key Takeaways