⚡ Market Pulse: The auto loan divide is growing—just not where you'd think

Hey everyone. CDG Recruiting’s got a fresh batch of top-tier roles open right now.

If you're looking to level up (or know someone who is), check these out:

• Parts Manager: Pennsylvania – from $185K/year

• Service Director: New Jersey – from $200K/year

• General Manager: Wisconsin – $250K–$400K/year

• CFO: United States – $300K–$400K/year

All full-time. Hit the links and throw your hat in the ring.

First time reading the CDG Newsletter? Subscribe here.

Welcome to the CDG Market Pulse—your no-fluff cheatsheet to auto retail, built to help dealers price right, stock smart, and stay ahead.

(Data sourced from Moody’s Analytics Auto Delinquency Data)

⚡ Subprime delinquencies are improving—but nearly 1 in 5 borrowers under 530 FICO (credit) score are still behind.

Overall delinquency rates in the lowest credit bands are down slightly, but don’t mistake that for stability.

• FICO: (300–529) → 19.85% DQ rate

• FICO: (530–579) → 13.69% DQ rate

Historically, the 300–529 tier typically sits between 15–18%, while the 530–579 tier sits around 11–13%, according to Moody’s and historical NY Fed data.

And Matt has some ideas of how this snowball started…

⚡ Delinquencies in the upper-subprime and near-prime segments were flat in April, but early repo risks aren’t fading.

Mid-tier credit bands are holding steady, but they’re also not low risk.

• FICO: (580–619) → 9.02% DQ rate

• FICO: (620–659) → 5.69% DQ rate

For context, DQ rates in these ranges have historically hovered closer to 6–7% and 4–5%, respectively. That means we’re still sitting 1–2 points above “normal.”

Still, these buyers qualify for more than deep subprime—but stretch harder to get it. And with student loan collections active again, many are juggling two major monthly payments for the first time in years.

The one text message that brings ghosted leads back

True story: a Northeast dealer had a buyer ghost after Day 3.

Sixty days later, that same lead came back – not because the team reached out, but because of this one automated text message:

“The 2025 Silverado RST you viewed just dropped $850 — and it’s got the Z71 package you wanted. Still interested?”

They responded. They re-engaged. They bought.

It wasn’t magic. Just relevance + timing.

Even your best reps can’t chase every lead forever.

But Foureyes can.

Right now, get the first 30 days totally free.

⚡ Delinquencies are creeping up for consumers with credit scores greater than 660.

Delinquencies are still low at the top, but every prime tier is trending up.

• FICO: (660–699) → 3.41% DQ rate

• FICO: (700–739) → 2.10% DQ rate

• FICO: (740–850) → < 0.75% DQ rate

DQ rates in the 660–699 range historically average around 2.5–3%, while borrowers above 700 typically stay below 2%.

This means shoppers in this tier are still qualifying for their car loans, but they’re also more selective about price, term, and transaction speed.

⚡ Wholesale used car values are close to $18K on average, and it’s boosting recovery rates for lenders.

Used car values are rising again. And the Manheim Index (average wholesale price) is back near $18K, up from around $16K in 2024.

And when used car values increase… so do recovery rates for repossessions.

[Recovery rate = the $$$ lenders recover after a repo.]

Right now, they’re getting about 50% of what was owed—up from 40% last year.

But here’s the catch: even with more borrowers falling behind, repos aren’t flooding the lanes like they used to. 

And higher values mean lenders can either hold firm or price loans higher to cover losses—which is tightening both inventory and lender flexibility.

(Of course, many lenders are handing out payment extensions like candy. But the “delay and pray” mentality can cause further problems down the road.)

Last week, we shared a delinquency data point to the CDG X account:

Almost immediately, many of you noted that student loan payments are going to be especially hard to ignore in the coming months.

But why now?

Because, as Moody’s Michael Brisson told CDG News, 30–40% of auto loan holders also carry student debt. And as of May 5, collections on defaulted student loans have officially resumed.

Which, as Derrick points out, is already adding pressure on the credit side:

And it’s not just credit scores.

More buyers are showing up underwater, which makes approvals harder and trade-ins tougher to close, even without student loans at play.

The signal: 1 in 3 auto loan holders has a student loan to budget for, and collections are kicking back in.

That means credit scores could drop, budgets could tighten, and more buyers could back out if risk isn’t flagged early and adjustments aren’t made before the deal falls apart at funding.

Delinquencies are climbing. Recovery rates are up. And student loan collections are putting more pressure on stretched buyers.

Translation: Affordability’s still tight. And we’re all keeping an eye on future rate calls from the Fed.

In the meantime, structure matters more than ever:

Stick to 60-month max terms, build for sub-$450/month payments, and lean on lenders using bank data or income flows, not just FICO.

Thanks for reading everyone.

— CDG