Tag: Loans

By on September 16, 2016

2016 Nissan Altima SR

Dodge. Nissan. Kia. Mitsubishi. Ever wonder how any cars from these makes end up getting sold?

While there are certainly cars from these brands that attract the higher end of the automotive consumer marketplace (Hellcat, anyone?), the vast majority of the customers who end up in a car from one of these brands are in them for one reason, and one reason alone: they’ve got subprime credit. And they’re not alone.

In fact, over half of the American public now has subprime credit, and there’s no sign that it’s getting better any time soon. As a result, most customers are just walking into a dealership hoping to be approved for a loan. Instead of being in a position of power when it comes to negotiation, they’re in a position of weakness.

For dealers, this is great news. For consumers, it’s awful.

(Read More…)

By on August 27, 2015

Signing his life and wallet away for the next six or so years with a long-term auto loan agreement

Next year may not be as kind to new car buyers with bad credit.

If you’ve been paying attention to the market recently, it’s been an up-and-down ride for the past few days. Market volatility is just one of the indicators that the Federal Reserve may be considering a hike to the federal funds rate (probably not this year, though), which would impact borrowing rates in a record-setting year for the auto-loan business. 

“It has the potential to impact auto loans, any rate increase certainly can,” said Melinda Zabritski, senior director for Automotive Finance for Experian. “The rate depends on so many other factors in the market … (A rate increase is) at some point, likely. But there’s not a strong chance that it will go up this year.”

Rates for loans have largely stayed the same since 2008, when interest rates were lowered to spur lending after the recession. Many of the low-rates today haven’t changed and automakers such as Subaru have offered interest-free loans on some of their cars.

(Read More…)

By on March 13, 2015

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Faced with less disposable income, higher taxes and more expensive vehicles (in most cases), loan terms in the Canadian market has gradually shifted to one where bi-weekly and even weekly payments have become the advertised norm, with 72, 84 and 96 month loans appearing as a fixture of the new and used vehicle marketplace. And with household debt levels reaching record heights in Canada, the chart above should be deeply concerning.

(Read More…)

By on December 9, 2014

 

Credit Unions will now be able to follow up with applicants who were unable to procure loans, and see if they pursued credit at other institutions, thanks to a new service from Equifax.

(Read More…)

By on September 18, 2014

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New rules being announced by the Consumer Financial Protection Bureau would mean that the captive finance arms would be subject to oversight from the CFPB.

(Read More…)

By on August 19, 2014

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In this year’s red hot new car market, the Honda Accord and CR-V have apparently captured the top spot in both new car and SUV retail sales through the first half of 2014, according to Polk registration data. But John Mendel, Honda’s head of sales, had some pointed words for the industry as a whole, and the state of the American auto market.

(Read More…)

By on July 3, 2014

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The Office of the Comptroller of the Currency, a government entity that regulates and supervises banks, is sounding the alarm regarding risks related to auto loans.

(Read More…)

By on June 19, 2014

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OEM captive financing arms are increasing their share of new car loans, with banks resorting to underwriting riskier loans in the used car market and to less credit-worthy buyers.

(Read More…)

By on June 2, 2014

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The easy-credit train keeps on rolling in the auto world, with credit rating agency Experian reporting new records in key auto finance metrics.

(Read More…)

By on March 24, 2014

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One year ago, we reported on the alarming trend of 97 month loans for new car sales. It turns out that these have now been supplanted by a substantially longer term. Say hello to the 144 month loan.

(Read More…)

By on October 14, 2013

Subprime-Auto-Lenders

Months after TTAC started to relentlessly bleat about the glut of money flowing into the auto loan sector, the mainstream media is finally taking notice. Automotive News is finally expressing some worry over the factors that we’ve been discussing for some time: car loan terms are getting longer (to help keep payments low), subprime lending is increasing and an expected rise in interest rates could put an end to the new car market’s exuberant performance.

(Read More…)

By on October 9, 2013

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GM Canada’s CEO is expressing apprehension over the way cheap auto loans are fueling vehicle sales in Canada.

(Read More…)

By on September 25, 2013

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While the engine behind the exceptional growth in new car sales is a hotly debated topic, leasing is proving to be an undeniable catalyst behind this year’s impressive new car sales numbers. Through June of this year, leasing accounted for 25.7 percent of new car sales, versus 22.2 percent in 2012.  A decade ago, that number stood at just 17.5 percent.

(Read More…)

By on June 27, 2013

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Over at Autobytel, Juan Barnett (better known as DC AutoGeek) takes a look at the history of auto financing, originally intended as a way for the common man to be able to afford an automobile some 90 years ago. The most striking thing is how attitudes have changed so dramatically over time.

Initially, bankers were calling for a ban on financing of personal automobiles, fearing that it would lead to financial imprudence. How times have changed.

In a 2008 letter to the Security and Exchange Commission, a collection of automotive finance companies argued against a proposed federal rule that would have made 60 months the maximum term for an automotive loan. The group said “[that the] 72 month term has become the industry standard,” and that it was critical to the American economy to allow banks to determine independently the risk as it relates to automotive loans.  They argued that any mandated term limit would cripple the automotive industry. They were probably right.

By on May 16, 2013

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Bad news on the subprime front, as credit rating agency Experian reports a rise in delinquencies and repossessions for auto loans in Q1 2013.

Melinda Zabritski offered a rather dubious explanation for the nearly 17 percent rise in repos (as well as the 1.3 percent uptick in 30 day delinquencies and 12.4 percent rise in 60-day delinquencies) (Read More…)

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