We are nearing the first full month with the new Administration and there has been a lot of activity from the White House. Vaccine distribution is rolling out, COVID-19 cases are trending down across much of the country, and Congress has a stimulus package to address. All of these actions bode well for the retail automotive industry. However, auto lenders have several other factors to consider going forward. The average interest rate on a five-year new car loan declined by 38 basis points, and the average four-year used car rate dropped 45 basis points during 2020 according to Bankrate.
Bankrate also predicts that new and used car interest rates will continue their downward trend. With shrinking interest rates and reduced volume, what steps can your institution take to bolster its auto loan portfolios, especially when competing on a low interest rate is no longer enough to motivate potential buyers to choose your auto loan?
One option is actively promoting auto loan refinance options. Simply helping consumers save a dollar can increase your auto loan income exponentially in this hyper-competitive lending market.