Determinants of Automobile Loan Default and Prepayment
12 Pages Posted: 19 Sep 2008
Date Written: September 17, 2008
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
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