Determinants of Automobile Loan Default and Prepayment

12 Pages Posted: 19 Sep 2008

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Brent W. Ambrose

Pennsylvania State University

Souphala Chomsisengphet

Office of the Comptroller of the Currency (OCC)

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

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

Sumit Agarwal (Contact Author)

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Brent W. Ambrose

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

Souphala Chomsisengphet

Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street, SW
Washington, DC 20219
United States
202-649-5533 (Phone)

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