It’s no surprise to anyone after a challenging 2018 auto lending market that 2019 will have many of the same speed bumps. Rising interest rates, tightening credit, and rising new vehicle prices all combined to make last year difficult. The good news is that 2019 will bring some opportunities to better the odds of success.
Competition is heating up in today’s flat auto lending market. Lenders who pulled out of subprime are re-evaluating that decision. However, in order to compete, lenders have found that they must slash rates in contrast to the Federal Reserve rate increases. As this is not sustainable, lenders must find ways to differentiate their auto loan offerings outside of rate. One way to accomplish this is through the use of complimentary consumer protection products.
Loans that offer complimentary consumer protection products can help you address the challenges of increased competition and delinquency control, while also providing additional streams of revenue. They differentiate loan offerings with consumers by providing valuable benefits. For example, a vehicle service contract can help significantly reduce the cost to repair a vehicle after a breakdown, keeping that vehicle on the road and consumers current on their auto loans, while protecting their bank accounts. Additionally, lenders have the opportunity to upsell consumers to greater/longer levels of coverage, increasing non-interest-bearing income. Continue reading