U.S. auto loan ABS delinquencies show sharp regional gaps in 1H 2026
Regional differences in U.S. auto loan asset-backed securities performance remain pronounced in the first half of 2026, even after adjusting for borrower credit quality and shelf composition. The pattern matters most for whole-loan buyers and for securitizations with unusually high exposure to states performing well above or below expectations.
Highlights
- Kroll Bond Rating Agency reports Southeast leads U.S. auto loan ABS stress in 1H 2026 with Mississippi at 4.57% 60-plus-day delinquencies.
- Vermont, Minnesota, and Maine show the lowest 1H 2026 auto loan ABS delinquency rates at 1.50%, 1.58%, and 1.86% respectively.
- KBRA notes that while diversification limits single-state risk, pools with outsized exposure to weak states face increased portfolio performance volatility.
State-level stress patterns in 1H 2026
As reported by Kroll Bond Rating Agency, the Southeast reports the highest credit stress in auto loan ABS during 1H 2026, with four of the five worst 60-plus-day delinquency rates coming from the region.Mississippi posts a 4.57% delinquency rate, followed by South Carolina at 4.54%, Georgia at 4.46%, and Louisiana at 4.17%. New Mexico, at 4.40%, is also among the five weakest-performing states, while Vermont at 1.50%, Minnesota at 1.58%, and Maine at 1.86% rank among the strongest performers mentioned in the data.
Implications for investors and securitization pools
KBRA says most auto ABS transactions are geographically diversified, which limits the effect of any single state on overall deal performance. Even so, geographic dispersion can become more significant when a securitization carries outsized concentrations in states that are performing materially above or below expectations.That dynamic is particularly relevant when a pool's state exposure differs from a shelf's historical geographic footprint. For whole-loan buyers, the state-by-state divergence may also carry added weight because portfolio performance can be more directly exposed to local credit conditions.
Our earlier article on Reach ABS Trust 2026-3 outlined Reach Financial’s $440 million term ABS deal backed by unsecured consumer loans and the preliminary ratings KBRA assigned to its five note classes. We highlighted the transaction’s key credit supports—such as overcollateralization, subordination (with an exception for Class E), a funded reserve account, and excess spread—along with Reach’s continued reliance on securitization as a funding channel in 2026.
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