The Latest News in the Car Loan Industry

With auto loan debt at record high levels, auto finance in America has made headlines due to supply chain issues, suspected predatory lending

practices or rising interest rates. Over recent months, this industry has encountered multiple roadblocks that threaten its viability.

Even with these challenges, consumers appear to remain interested in purchasing cars. New online financing and re-financing companies have taken advantage of this growing demand by working alongside banks and automaker captive finance firms to make car-buying simpler, quicker and less expensive for consumers. Capital One recently launched an Auto Navigator tool which lets car shoppers see prices and monthly payments without impacting their credit scores; similarly GM unveiled its own used-car online marketplace to compete with Vroom and similar sites.

At the same time, regulators have begun scrutinizing some subprime lenders. The Consumer Financial Protection Bureau initiated legal proceedings against USASF Servicing – an affiliate of now-defunct U.S. Auto Sales – alleging illegal activities like overcharging customers for insurance products and disabling vehicles using “kill switches”. USASF Servicing has denied all allegations in court filings.

Financial Times researchers believe that current factors could stifle car sales and trigger a vicious cycle of higher interest rates, higher vehicle prices and declining inventory. This trend could negatively impact borrowers, automakers and financial institutions alike.

Banks are shifting their underwriting policies in order to avoid disaster, with Chase Auto’s CEO Peter Muriungi noting an increase in delinquency levels that has prompted him to become more cautious when providing collateral for loans. Furthermore, price inflation on vehicles may lead more buyers towards secondhand models rather than purchasing brand new.

Staying ahead of the competition requires lenders to incorporate new technology and invest in data analytics to streamline processes and identify risks more quickly. To be successful in such a dynamic landscape, lenders need to partner with LOS vendors that understand auto finance industry trends as they change over time.