Automotive Lending Trends To Watch
Used car dealers everywhere are always on the lookout for the right lending solutions. But so much of this can be dependent on the current market. Keeping a keen eye on the latest trends is a fantastic way to ensure you provide your customers with the best lending options available.
In a market that can fluctuate due to the availability of lenders or their current rates, it’s important to frequently take a step back and look at the big picture. That’s why we’ve identified some recent macro trends that can help bring optimism to your everyday lending.
Originations Are Stabilizing. A recent report from TransUnion states that while originations are still on the decline, the rate at which they’re declining has slowed to a point that will soon be stable year over year.
Same Story With Delinquencies. Yes, delinquencies are still on the rise, but at a much slower rate than months past. This shows a trend that is nearing the same year-over-year stabilization we anticipate to see with originations. Stable origination rates along with stable delinquency rates is a recipe for a successful car-selling season.
Auto Balances Rising More Slowly. While Q1 of 2018 saw total auto balances grow 5.2%, TransUnion reported that it’s the slowest annual growth rate since 2012. This is a good sign that more customers are migrating into more reliable credit tiers.
Big Lenders Being More Selective. Big national names writing fewer subprime deals might sound like bad news for many dealers, but looking at this as an opportunity could help improve your long-term lending solutions. These larger lenders focusing more on higher credit profiles, opens the door for more regional credit sources with more experience with subprime customers. These lenders will also tend to allow more room for F&I products on subprime deals, since they understand the value they provide toward keeping customers on the road – which also means added profit opportunities for your dealership.