I’m looking for information on the default rate applied to auto notes. Could someone explain what this rate typically is and under what circumstances it is used?
Hey Liam_Witty, I’ve been digging through some posts and comments, and honestly, there isn’t really a one-size-fits-all answer on the default rate for auto notes. From what I gather, it’s not like the bank has a sticker that says, ‘Charge this rate on defaults.’ It tends to be more of an internal guideline that can vary a lot depending on the lender’s policies, the borrower’s risk profile, and even current economic conditions. Some places I’ve seen mentioned numbers in the low-to-mid teens, but that’s not a hard and fast rule. It really seems like it’s all based on how much risk the lender is trying to cover and their overall business model. So, if you’re in a situation where this is a concern, it might be a good idea to have a chat with your lender to see what they’d do specifically.
The default rate isn’t a magic number—it’s more of a penalty rate that kicks in when your auto note goes delinquent. In my experience, lenders typically use a multiplier that reflects both the increased risk and the extra costs incurred after you miss a payment. That penalty rate is often calculated on a case-by-case basis, but you’ll usually see numbers in the low to mid-teens as a baseline. It’s essentially designed to cover potential losses and administrative overhead during a default scenario. It pays to review your contract closely so you know how your lender handles defaults, as these rates can vary with your credit risk and current market conditions.
Hey Liam_Witty, I’ve seen various figures tossed around, but the default rate on auto notes typically falls into a range rather than being a fixed number. It’s less about a single rate device and more about the guidelines lenders use when a vehicle loan goes sour. In practice, when borrowers default, the rate often hovers around what’s used as a penalty or the rate applied in repossessions, which, depending on credit quality and economic conditions, could be in the low-to-mid teens. Lenders often assess this by looking at broader trends—rising interest rates, shifts in repo activity, and tightening regulations push these figures around.
One thing to keep in mind is that these default rates aren’t set in stone; they are part of internal risk management strategies. For instance, some lenders might trigger a default rate that’s slightly higher based on the borrower’s risk profile, which lines up with recent trends where stricter lending criteria and economic uncertainty have nudged multipliers upward. Hope that gives a clearer picture. 
Hey Liam_Witty, just adding my two cents here. I’ve been following trends in the auto finance space and it seems like the default rate is more of a flexible tool than a fixed fee. Lenders tend to tweak this rate based on current economic weather—think rising interest rates and a more cautious approach due to tougher regulatory environments. For example, in turbulent periods, lenders might bump up their internal rates to cushion themselves against a wider repo spread and increased operational costs. Even though you often hear figures in the low-to-mid teens, it really depends on the lender’s specific risk management strategy and the borrower’s credit profile. Always worth taking a closer look at the fine print to see exactly how it’s applied in your case. Stay savvy!