Lending Curve - Part 17

What to Expect in 2020

Post author By efgmarketing
Post date January 29, 2020

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?

Business Growth

Are You Ready for the Holidays?

Post author By efgmarketing
Post date November 13, 2019

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.

Compliance

Guarding Against Fraud

Post author By efgmarketing
Post date October 30, 2019

Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Instances of fraud have been on the rise lately and regulatory agencies at both the state and federal level have been keeping a watchful eye on the automotive lending industry. Research in 2017 showed that fraud cost the auto industry between $4- to – $6 billion – in one year! Data from PointPredictive shows the dramatic jump between 2015 to 2017. While the research has not been updated for 2019, it’s likely a similar picture.

This correlates closely with the implementation of microchips to credit and debit cards. Starting in 2015, the use of microchips rose, making credit cards more difficult to counterfeit, and forcing criminals to focus on other types of fraud like new account fraud.

Tags fraud, fraud protection, fraud risk