As fears of increasing auto loan delinquencies are giving some lenders pause, Capital One Auto Finance president of financial services Sanjiv Yajnik calls said increase a return to “norm,” with pent-up demand and greater competition will maintain availability of credit.
Automotive News interviewed Yajnik last week about the state of auto loans, beginning with a recent statement made by Capital One CEO Richard Fairbank about how lending had experienced a “once in a lifetime” period of growth prior to the start of the Great Recession. He explained the resulting downturn led to a higher quality of lending due to both lenders and consumers becoming more conservative, prompting “very low losses and good returns” that are continuing to this day for the most part:
Now as we come out of the downturn, conditions are becoming more normal. Some consumers are coming to the high side of what they should be borrowing. Private equity-funded lenders and other lenders are coming back to autos. Some lenders are developing habits in loan amounts and loan approvals that mean one has to be discerning in what loans you approve. It’s not the volume of loans; it’s the quality.
Yajnik goes on to state that while auto lending continues to increase overall, top-line growth is still in the offing. He also cautioned lenders to “be careful with maintaining the right customers with the right cars,” and to take “the high road” when lending, lest a repeat of 2008 occurs.