articles Ratings /ratings/en/research/articles/200501-sf-credit-brief-while-stay-at-home-orders-clear-traffic-u-s-auto-loan-extensions-rise-11472314 content esgSubNav
In This List

SF Credit Brief: While Stay-At-Home Orders Clear Traffic, U.S. Auto Loan Extensions Rise


Criteria | Structured Finance | RMBS: Global Methodology And Assumptions: Assessing Pools Of Residential Loans


CLO Spotlight: The State Of U.S. CLO LIBOR Transition As Deadline Approaches (As Of June 1, 2023)


SF Credit Brief: Overall U.S. CMBS Delinquency Rate Jumped 39 Bps To 3.2% In May 2023; The Largest Increase Since June 2020


LNR Partners LLC STRONG Commercial Mortgage Loan Special Servicer Ranking Affirmed; Ranking Outlook Stable

SF Credit Brief: While Stay-At-Home Orders Clear Traffic, U.S. Auto Loan Extensions Rise


One of the first effects that the COVID-19 pandemic has had on outstanding U.S. auto loan asset-backed securities (ABS) has been the spike in extensions. In the prime segment for March, extensions on a dollar basis equaled 3.94% of outstanding loans as of the beginning of the month, 12 times February's level of 0.33%. For the four subprime auto loan ABS shelves (Santander's DRIVE and SDART, AmeriCredit, and World Omni's Select), extensions more than quadrupled to 6.82%, from 1.53% in February.

COVID-19 Slows Traffic, But Accelerates Extensions

The spike in extensions isn't surprising given that over 10 million Americans applied for unemployment benefits in March due to layoffs and furloughs as a result of the stay-at-home orders designed to slow the spread of the coronavirus. Most auto lenders have responded by providing affected borrowers payment extensions/deferrals of between 30 and 120 days. These extension/deferral plans differ by lender, with some requiring that the obligor be current at the time of the extension and others allowing the obligor to be up to 90 days' delinquent. Lenders generally waive extension fees, although interest continues to accrue through the extension period. These extensions are intended to be short-term (i.e., to tide the obligor over until their paychecks resume). When used effectively, they can generate lower losses than repossessing and liquidating the vehicles.

Chart 1


Chart 2


Extensions In Prime Pools Are As High As Subprime Pools In Some Cases

While one would expect the level of deferrals to be higher in subprime shelves than in higher-quality pools--that is generally true--it isn't always the case. For example, extensions in California Republic Bank's nonprime pools and those of Ally exceeded those on Santander's SDART platform, and extensions from Ford Credit, Nissan, World Omni, and Mercedes equaled or exceeded those from AmeriCredit.

Chart 3


Chart 4


It's hard to conclude too much though from one month of performance. Further, the banks and captive finance companies may be more highly motivated to offer extensions to their customer base due to the seemingly stronger credit quality of their obligors as well as the lenders' desire to maintain customer loyalty. In addition, given the higher annual percentage rates (APRs) on subprime auto loans, it may be more prudent for those customers to make the payments when due if possible rather than extend the loan and have large amounts owing at the end of the loan term due to accrued interest (for more detail, see "Is There Extension Tension in U.S. Subprime Auto Loan ABS?" published Nov. 29, 2018). In contrast, many prime customers benefit from subsidized APR financing of 0.0%-1.9%, so there is little-to-no additional interest that will accrue during the extension period.

DRIVE Deals Account For Approximately 50% Of Subprime Extensions

GM Financial's AmeriCredit shelf accounts for approximately 29% of the total loans attributable to the four subprime shelves that provide Reg AB II data. Santander's SDART and DRIVE platforms comprise most of the remainder at 28% and 41%, respectively. AmeriCredit's share of extensions by loan count, however, was only 18%, while, perhaps not surprisingly, the deep subprime DRIVE platform accounted for 50%.

Chart 5


Chart 6


Ally Accounts For A Disproportionate Share Of All Prime Extensions

CarMax (17%), Honda (16%), and Toyota (16%) together account for approximately 49% of the total available March loan count for the prime shelves reporting under Reg AB II. However, they account for only 32% of March's extensions. Ally, in contrast, accounts for 11% of March's auto loans, but 34% of the extensions. In mid-March, Ally announced they would defer payments for auto customers for up to 120 days, which was more liberal than most of their peers. In addition, World Omni's share of total available March loans is approximately 7%, while its share of loans in extension is 10%. World Omni's pools tend to have a 47%-50% concentration in Florida, whose travel and leisure economy has been severely affected by shelter-in-place restrictions (see map below). Also, consistent with its AmeriCredit shelf, GM Financial's prime GMCAR shelf's share of extension loans (1%) is smaller than its share of total available March loans (7%).

Chart 7


Chart 8


Nevada And Florida Have Highest Extension Levels

As the two heat maps below indicate, the states with the highest extension levels (based on Reg AB II data) in both the prime and subprime segments are Nevada and Florida. In prime, approximately 8% and 7% of the loans in Nevada and Florida, respectively, were extended in March. In subprime, approximately 11% and 10% of the loans in these two states, respectively, were extended. In Nevada, the leisure and hospitality industry (including casinos) directly employ one-in-four workers in the state, and the casinos have been closed since mid-March.

Chart 9


Chart 10


In our view, extensions will likely remain high for at least the next two-to-three months due to high unemployment levels, and lenders preferring to work with their customers rather than trying to repossess and sell vehicles into a depressed and only partially functioning used vehicle wholesale market. Further, many states have imposed restrictions on collection efforts to a greater or lesser extent, and banned repossessions and the garnishment of CARES Act payments while their state is under a state-of-emergency.

We believe these extensions, by themselves, will not lead to timely interest payment defaults on S&P Global Ratings-rated auto loan ABS transactions due to significant liquidity in those transactions, including reserve accounts, the ability to use principal collections to pay bond interest, and conservative assumptions used when setting legal final maturities (see "The Potential Effects Of COVID-19 On U.S. Auto Loan ABS," published March 26, 2020). However, higher credit losses, including losses on accounts that are extended and subsequently default, could lead to rating downgrades and defaults depending upon the level of credit deterioration and credit enhancement supporting the various classes. Currently, in our view, the transactions that are at greatest risk of downgrade and default are subprime auto loan ABS with noninvestment-grade classes. In the coming months, we will be monitoring extensions and other performance variables on outstanding auto loan ABS transactions and will be taking rating actions as deemed appropriate.

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak around midyear, and we are using this assumption in assessing the economic and credit implications. In our view, the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: As the situation evolves, we will update our assumptions and estimates accordingly.

Appendix: Data Notes

The extension rate is calculated as the dollar amount of the loans extended divided by the total beginning balance of the loans for that month.

The data provided for most of the statistics in this article were generated from the Reg AB II loan level filings whether or not the underlying deals were rated by S&P Global Ratings. In the prime segment, we included the securitizations of 14 different originators: Ally Bank, American Honda, California Republic Bank, CarMax, Capital One, Ford Credit, GM Financial, Harley Davidson Credit Corp, Mercedes-Benz Financial Services, Nissan Motor Acceptance, Toyota Motor Credit, USAA Federal Savings Bank, VW Credit, and World Omni Financial (while we classify California Republic's two pools in this analysis, 2017-1 and 2018-1, as nonprime, for ease, we've grouped them in the prime segment). In addition to the subprime shelves of AmeriCredit, Santander, and World Omni Select, whose performance data are filed with the SEC, we also compiled extension data for most of the 144-A subprime securitizers using their monthly servicing report data, as shown in the Subprime - Extension Rate chart above.

The authors would like to thank Bushra Dawawala, Aakansha Khandelwal, Rakesh Mourya, and Sahayajayaseelan Senathikagu for their contributions.

This report does not constitute a rating action.

Primary Credit Analysts:Amy S Martin, New York (1) 212-438-2538;
Timothy J Moran, CFA, FRM, New York (1) 212-438-2440;
Secondary Contact:Deegant R Pandya, New York (1) 212-438-1289;

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to:

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back