Determinants of Automobile Loan Default and Prepayment
12 Pages Posted: 19 Sep 2008
Date Written: September 17, 2008
Abstract
The authors examine whether a borrower's choice of automobile reveals information about future loan performance. They find that loans on most luxury automobiles have a higher probability of prepayment, while loans on most economy automobiles have a lower probability of default, even when holding traditional risk factors, such as income and credit score, constant.
Keywords: consumer debt, auto loans, household finance, prepayment, default, Financial Institutions and Services, Duration Analysis, Personal Finance, Asymmetric and Private Information
Suggested Citation: Suggested Citation
Agarwal, Sumit and Ambrose, Brent W. and Chomsisengphet, Souphala, Determinants of Automobile Loan Default and Prepayment (September 17, 2008). Economic Perspectives, Vol. 32, No. 3, 2008, Available at SSRN: https://ssrn.com/abstract=1269525
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