ARLINGTON, Texas -

While the latest overall auto-finance default reading came in at the lowest point in the past 10 years, Agora Data tried to generate more clarity about delinquency specific to the buy-here, pay-here industry.

Through which AgoraInsights shared exclusively with BHPH Report this week, Agora Data used its newest feature to track the impact of COVID-19 since the beginning of the pandemic by analyzing the daily data from hundreds of millions in principal balance and hundreds of thousands of individual contracts originated by BHPH dealers.

Agora Data explained one of the leading indicators to default is contractual delinquency, which analysts clarified as the customer is deemed late per the agreement with the BHPH dealer and according to the terms of the installment contract.

The following chart notes contractual delinquency with the best period measured during the pandemic on March 18 and the worst period on April 13.

Delinquency Bucket  March 18 April 13  April 20
 Current  64%  55%  59%
 1 to 29 days  24%  30%  26%
 30 to 59 days  8%  10%  11%
 60 to 89  4%  4%  4%

Source: Agora Data

Agora Data discovered contractual delinquency between March 18 and April 20 has migrated mostly negative, “although we have seen a modest improvement from the low observed on April 13.”

Analysts also are monitoring delinquency on a recency basis. They described recency as being the days since an actual payment is made. The following rundown shows recency for the same observed period:

— March 18: 19 days

— April 13: 22 days

— April 20: 21 days

“Recency will remove the noise created by deferments,” Agora Data said. “For example, an underlying borrower may have made his March 10th payment and then received a deferment for his April 10 payment. In that example, the borrower would show as contractually current but would be in the 1-29 days delinquent on a recency basis.

“Such use of deferments likely explains the improvement in contractual delinquency from April 13 to today where accounts that were in the 1-29 bucket on April 13 rolled back to current on a contractual basis as of April 20,” analysts added.

Agora Data also pointed out that overall, the observed portfolios have a two-day average increase (deterioration) in recency.

The firm closed this data update with a recommendation for BHPH dealers.

“While overall recency has not gapped out too materially, nevertheless, BHPH dealers need to keep an eye on both metrics of delinquency as they manage through this crisis,” Agora Data said. “It requires careful handling of your underlying customers while simultaneously assessing the overall health of your portfolio.”