Lending Curve - Part 28

Choose: Compete or Manage Risk

Post author By efgmarketing
Post date March 22, 2017

Contributing Author:
Brien Joyce
Vice President
EFG Companies

Remember when you were shocked that average loan terms had increased to 62 months, then 68 months and so on? While the industry is no longer shocked by loan terms that last more than five years, lenders are now grappling with the reality that their borrowers are up-side-down on their loans for much longer periods of time while still making record-high loan payments.

According to Experian’s latest State of the Auto Finance Market report, the average new vehicle payment increased to $506 in Q4 2016, with an average loan term of 68 months and an average amount financed of $30,621.

Within 68 months, what do you think is the likelihood of a consumer experiencing something that would affect their ability to make their auto loan payment? Maybe their car breaks down or they lose their job. Your algorithms can probably tell you that the likelihood is pretty high. That’s why Experian has seen 60-day delinquencies rise in almost every State of the Auto Finance Market report issued in the past few years.

Tags Brien Joyce, EFG Companies, Experian, State of the Auto Finance Market

Compliance

Online Reviews and Compliance

Post author By efgmarketing
Post date March 1, 2017

Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Over the last few years, businesses everywhere have been working hard to establish a positive online presence beyond just their website. It’s become standard practice for lenders to be listed on websites like consumeraffairs.com, lendingtree.com, and bankrate.com. The reason behind these listings is to build trust online and develop a brand presence.

After all, it would be extremely difficult to find an industry that hasn’t been affected by the prevalence of consumers who conduct online research for products and services, including reviews, before making a decision. This tends to become more prevalent with services and purchases that could have long-term repercussions, including insurance, loans, credit cards, etc.

Now, you’re probably asking yourself, what does this have to do with compliance?

In this highly integrated world of online reviews and social media, it can be tempting for lenders to use cookie cutter, online review vendors to boost positive reviews while minimizing negative reviews. For example, one widely used tactic across all industries is to utilize contract provisions, including online terms and conditions, to penalize consumers for posting negative reviews or complaints. This specific tactic has been ruled as illegal under the Consumer Review Fairness Act (CRFA), which protects people’s ability to share in any forum their honest opinions about a business. Specifically, the CRFA makes it illegal for a company to use a contract provision that:

Tags AFIP Certified, AG, and bankrate.com., Attorney General, Consumer Review Fairness Act, consumeraffairs.com, CRFA, EFG Companies, Federal Trade Commission, FTC, lendingtree.com, NAF Certified, steve roennau

Business Growth Economy

The Rat Race is On!

Post author By efgmarketing
Post date February 18, 2017

Contributing Author:
Mark Rappaport
President
Sinplicity Division
EFG Companies

In 2016, we all held our breath to see how the presidential race would turn out, with everyone saying that those results would affect the economy. In the aftermath of President Trump’s win, we watched the “North Star” of the health of an economy – the stock markets – and they rose, hopefully signifying good times ahead.

Nevertheless, the heated political atmosphere continued past 2016 and into 2017. Now, you can’t listen to the radio, turn on the T.V., read a newspaper, or open a social media app without seeing articles about the current administration and whether or not it is successful. No matter if you are a Republican or Democrat, Trump or Clinton supporter, if you’re a lender seeing these stories proliferate, it probably gives you pause on whether the economy can weather this storm.

According to the National Automobile Dealers Association (NADA), U.S. new vehicle sales are expected to stay above 17 million in 2017, roughly on par with last year’s levels. On all accounts, it currently looks like we’re still on track to meet those expectations. As a lender, you probably expect to receive roughly the same loan volume as you did last year. However, economic factors like the heated political atmosphere could have lasting repercussions on your loan volume.