Auto loan default rates continued to drop in December as borrowers began to dig themselves out of the financial holes that the recession has helped to create.

Standard & Poor and Experian's joint Consumer Credit Default Indices report that the rate of auto loan defaults declined nearly 5 percent from November to December and now sits at 1.68 percent. That figure was down 36.85 percent when compared with December of 2009.

"Default rates across the four major categories of consumer borrowing declined in December from November and from a year earlier. Nationally, consumers continue to gradually improve their financial condition," said David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P.

The index also tracks default rates across mortgages and bank cards, but reported that auto loan defaults remained the lowest and experienced the biggest decrease out of all types of borrowing.

This news, coupled with that of interest rates dropping for car loans, means that it may be a great time to secure financing for a new or used vehicle.