Net loss rates on securitized prime and subprime auto loans improved dramatically during the second quarter of 2006, thanks to steadily falling unemployment rates and rising values on used cars, according to Moody's Investors Service.

Among prime auto loans, the net loss rate fell to 0.45%, a dramatic improvement over the 0.59% rate from the same period a year ago. Also, the delinquency rate remained unchanged from last year's second quarter at 0.37%, which was also a historic low for the index. The Manheim Used Vehicle Value Index, reported that used car values at auction improved by 1.3% over levels for the previous year. Increased used car valued can directly affect net loss rates, because they can mean higher recoveries on repossessed vehicles, according to the rating agency.

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