Lending Curve

Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

In February, the Department of Defense (DOD) issued a statement regarding its interpretation of
the Military Lending Act (MLA). According to a filing in the Federal Register,

“The Department of Defense (Department) is amending its interpretive rule for the
Military Lending Act (the MLA). The MLA, as implemented by the Department, limits the military annual percentage rate (MAPR) that a creditor may charge to a maximum of 36 percent, requires certain disclosures, and provides other substantive consumer protections on “consumer credit” extended to Service members and their families. The Department is now withdrawing the amended question and answer number 2 (Q&A #2), published in the December 14, 2017 Interpretive Rule, which discussed when credit is extended for the purpose of purchasing a motor vehicle or personal property and the creditor simultaneously extends credit in an amount greater than the purchase price of the motor vehicle or personal property.” – federalregister.gov/d/2020-04041

This statement follows a joint petition filed in January 2018 by the National Automobile Dealers Association (NADA) and the American Financial Services Association (AFSA) requesting the DOD review the interpretation. When the DOD issued its 2017 interpretation, there was no public notice or opportunity for the NADA and other retail automotive trade associations to comment on the implications. Continue reading →

Contributing Author:
Brien Joyce
Vice President
EFG Companies

Credit unions are guided by a series of internal, state and federal rules and regulations pertaining to data security. One example is the requirements established by the National Credit Union Association (NCUA). This entity has set forth the IT Security Compliance Guide designed to summarize the obligations of credit unions to protect information in specific situations. One specific situation is the proper capturing – and disposal of information. It is often this situation, and the role of credit union partners and administrators, that puts a credit union at risk for a data breach. Let’s take a look at the guidelines and the opportunity for risk.

The proper disposal of information requirements in the Security Guidelines applies to any personal information a credit union obtains about an individual. But those requirements also extend to a credit union’s providers. A credit union must require its service providers that have access to consumer information to develop appropriate measures for the proper disposal of the information, regardless of whether a loan is ultimately secured. In essence, if a dealership provides credit information to a potential lender, that information must be disposed of properly whether the loan is completed or not. How often do you assess the information disposal practices of your partners? Continue reading →

Contributing Author:
Brien Joyce
Vice President
EFG Companies

As financial institutions and dealers close the books on 2019, it’s worth reflecting on a few data points that will prove useful in 2020. The Experian State of the Automotive Finance Q3 2019 Report reflected these key findings:

Delinquency trends remained stable at 2.25% for 30-day delinquencies and 0.75% for 60-day delinquencies
Banks and captives show increases in market share, while credit unions decline
Credit scores continue to increase for new financing with average credit score reaching 725
Used prime financing reach highest point since 2009
Total market remains stable with modest year-over-year change
Loan amounts set yet another record high
Longer term loans continue to dominate the market
Rates continue to increase across all risk segments

Couple these points with the increasing cost of new vehicles, a tight market for used vehicles and strong end-of-year sales numbers and you have a good outlook for the 2020 auto finance market. So, what’s a credit union or local bank to do to increase market share in a climate of rising vehicle prices, monthly payments and loan terms? Continue reading →

Contributing Author:
Brien Joyce
Vice President
EFG Companies

Holiday season is here! Will consumers be spending? Recent PwC research says, “yes”. In fact, the PwC 2019 Holiday Outlook shows consumers are optimistic with 86 percent saying they will spend the same or more this year, than in 2018.

But, will this holiday sentiment extend to the automotive industry? According to J.D. Power, the fourth quarter hinges on consumer affordability, rate reductions and manufacturer incentives to clear 2019 inventories.

Prepare, Prepare, Prepare

Unfortunately, credit unions have their work cut out for them. According to Experian’s latest State of the Automotive Finance Market report, credit unions lost market share in the retail automotive market in the second quarter of this year. Especially glaring was the fall to 26 percent market share for used vehicle financing, previously a stronghold in the sector.

While some pundits claimed the credit unions scaled back their auto originations due to overcapacity, others point to more aggressive efforts among traditional and non-traditional lenders entering the space. Banks increased their used-vehicle market share to 36.3 percent, up 1.7 percentage points from 2018. Non-traditional lenders, including digital providers, also saw an uptick thanks to more consumers purchasing their vehicles online.

Continue reading →

Lending Curve

New DOD Interpretation Opens Options for Lenders

Data Security Beyond Your Front Door

What to Expect in 2020

Are You Ready for the Holidays?

Prepare, Prepare, Prepare