{"id":290,"date":"2014-05-08T09:59:18","date_gmt":"2014-05-08T14:59:18","guid":{"rendered":"http:\/\/efgintelligence.com\/subprimepoint\/?p=290"},"modified":"2018-02-27T09:55:27","modified_gmt":"2018-02-27T15:55:27","slug":"prepared-rising-auto-loan-rates","status":"publish","type":"post","link":"https:\/\/efgintelligence.com\/lendingcurve\/prepared-rising-auto-loan-rates\/","title":{"rendered":"Are You Prepared for Rising Auto Loan Rates?"},"content":{"rendered":"
\"Steve
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies<\/figcaption><\/figure>\n

Last year was a great year for the auto industry mostly because consumers from all credit tiers were able to secure financing for both new and used vehicles. According to the Federal Reserve, auto loan rates for new cars hit their lowest level in the last 40 years<\/strong>. Meanwhile, subprime lenders increased their share of the used vehicle market to nearly 56.7 percen<\/strong>t by Q3 of 2013.<\/p>\n

However, those low interest rates were paired with longer terms and higher loan-to-value ratios through the first quarter of 2014. Because of this trend, NADA analysts expect subprime lenders to react to the heightened risk of potential default associated with longer terms and begin to raise their rates in the second half of 2014. In other words, the subprime low APR bubble may be bursting.<\/p>\n

With a rate increase expected in the latter part of this year, how are you preparing to keep your share of the market? <\/b><\/p>\n

Lenders always have that drive to compete on rate. But, when you are unsure about the potential for significant rate volatility, how do you manage the impact on your loan volume?<\/p>\n

In reality, the F&I manager will often look beyond rate and assess the overall benefit<\/i><\/b> of conducting business and maintaining relationships with particular lending institutions. Here\u2019s a quick self-diagnosis to determine how well insulated your business is to market rate fluctuation:<\/p>\n