The auto industry is changing – again. If you’re like me, you probably feel whiplash from all the changes that have affected the automotive industry in the last few years. From pandemic shutdowns and parts shortages to sky-high interest rates, automotive lenders have faced the challenge of auto loan portfolios continuously testing the boundaries of risk mitigation.
The Wall Street Journal recently reported that the costs related to car ownership continue to outpace the consumer price index. Aside from insurance, gas, parking, and maintenance, the auto loan itself has reached epic proportion. According to the latest State of the Automotive Finance Market report from Experian, the average amount financed on a new vehicle for 2023 was $40,366 with an average monthly loan payment of $738 with loan terms up to 85+ months.
These costs alone are not sustainable for consumers or lenders. According to Credit Union Leasing of America, over-extension is one of the primary concerns for credit unions in the 2023 auto-finance landscape.
