March remittance reports showed improving auto loan ABS credit performance, with annualized net losses and delinquency rates falling month-over-month (MoM) in KBRA’s prime and non-prime indices. Current index values as well as MoM and year-over-year (YoY) changes are presented in the table below.
The MoM improvements are not surprising, as borrowers continue to recover from holiday spending and tax refunds have provided an additional source of cash to make loan payments. The average refund amount climbed 5% YoY, largely due to the $900 (or 7%) increase in the standard deduction for 2023 tax returns for single filers, as the IRS adjusted the provision to offset the impact of elevated inflation. We expect continued improvement in loan performance for the next month or two, before summer travel and other seasonal factors begin to weigh on loan performance.
The data shown in this report and other indices metrics can be found