Author: efgmarketing

Categories
Business Growth

Going Green for EV Loans

Brien Joyce Author

We’ve all heard that sales of electric vehicles (EVs) have slowed over the past few months. While General Motors, Rivian and Toyota recently posted upbeat EV deliveries for the second quarter, EV manufacturers still face a bumpy road ahead. Demand for EVs has grown more slowly than expected due to high borrowing costs, economic uncertainty and consumer preference for gasoline-electric hybrids.

So, I was really interested to learn what some lenders are doing to boost their EV market share. In oil-focused Oklahoma, Tinker Federal Credit Union is offering EV buyers a 0.25 percent reduction in loan rates on both new and refinanced vehicle loans, with no prepayment penalties. In a post on its website, the bank encourages customers to “get behind the wheel of [a] green vehicle and enjoy better fuel efficiency, less pollution and lower loan rates.” This approach is in direct opposition to other lenders who are charging higher interest rates for EV loans.

According to research from the University of Pennsylvania Wharton School of Business, EV buyers face tighter financing terms compared to those who purchase conventional vehicles. EV auto loans are financed with higher interest rates, lower loan-to-value ratios, and shorter loan durations. Lenders tend to price in the risks they perceive in obsolescence caused by rapid advances in EV technology, leading to a steeper depreciation in value and reduced resale value.

Continue reading “Going Green for EV Loans”
Categories
Compliance

Here to Stay

Recently, the Supreme Court reversed a decision by a federal appeals court in Louisiana, rejecting a challenge concerning the constitutionality of the funding structure of the Consumer Financial Protection Bureau (CFPB). The case originated from a challenge by industry groups to a “payday lending” rule issued by the CFPB in 2017. By approving the CFPB’s funding from the Federal Reserve, rather than through the congressional appropriations process, the ruling protects the agency from future funding threats.

Reinvigorated by the Supreme Court’s decision, the independent agency, which is responsible for enforcing consumer finance laws, has shown signs that it intends to move forward with all activities—rulemaking, investigation, and enforcement—at full speed. Agree or disagree with their role and existence, the CFPB is here to stay and credit union leaders should make sure they are in full compliance.

In a recent interview with NPR, CFPB director Rohit Chopra provided some insight into the agency’s mission, approach to consumer protection and fraud investigation. Born out of the Great Recession, the CFPB receives over 200,000 consumer complaints each month and works to address financial scams and fraud. In fact, the agency plans to issue a delayed auto lending report, outlining the results of its inquiry into the portfolios of nine auto lenders. While the specific details regarding the content of the report are not yet available, anticipated topics will include affordability, practices in loan servicing and collections, as well as competition among subprime lenders.

Continue reading “Here to Stay”
Categories
Uncategorized

Tax Season Will be Bigger…But Take Longer

Here’s some good news. According to the most recent IRS data, the average tax payer will see a four percent increase in their refund versus the same time last year. This boost in 2024’s average refund size is due to the IRS’ adjustment of many tax provisions for inflation. The standard deduction and tax brackets were set seven percent higher for the current 2023 tax filing year. Because of that, workers whose pay didn’t keep up with last year’s high inflation are on track to get bigger tax refunds, with some lucky ones likely to receive up to 10 percent more in 2024.

And now the bad news. It might take longer to receive that tidy refund than in years past. While the IRS says it issues more than 90 percent of tax refunds within three weeks of receipt, the agency is quite a bit behind that pace in 2024. Several reasons factor into the delay. The agency had an additional week to process returns last year and the overall number of taxpayers filing on time is down. Changes to the tax code, increased safeguards against identity theft, as well as new “Where’s My Refund” tracking software have all impacted processing speed.

For retail automotive dealers and lenders who are counting on the April refund bump in car sales, it’s time to put another plan in place. According to a new study from Bankrate, half of all Americans scheduled to receive a refund are planning to use their checks to pay down debt or bolster savings versus a making a big purchase such as a vehicle. However, there are opportunities for credit unions to boost the odds of capturing those consumers who do decide to apply a tax refund towards a vehicle.

Continue reading “Tax Season Will be Bigger…But Take Longer”