Summer is considered prime car-buying season, and cars, new and used, often make the list of potential gifts to celebrate a college graduation. A car is a milestone purchase in a young adult’s life that can help them wisely budget for a relatively larger expense and build credit.
This summer everyone, but especially young people, will be anxious to get out of the house and on the open road, so here are the trends and data your bank or credit union needs to be aware of when marketing car loans to today’s younger and first-time buyers.
Cruisin’
Why is it that summer is the time of year many Americans choose to buy a car? The simple answer, according to RepoFinder.com, is this: The warm weather is ideal for going out to look at cars. It’s also the time of year that car prices go up due to increased demand. This summer particularly could be challenging for buying a car, whether new or used, due to stock shortages across the auto industry, so get your offers out there quickly and frequently.
Auto Lending Remains Strong
The COVID-19 pandemic made it increasingly appealing to own a car as a means of transportation without the risk of infection. A report from Experian found that between 2019 and Q4 2020, overall auto debt in the United States grew by $80 billion to $1.37 trillion, which is a 6% increase. And, as we all know, greater demand versus supply will drive up values and loan amounts.
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Clear Obstacles
When marketing your auto loans, make it clear that you have options available for first-timers. Remember, many graduating college students haven’t had a lot of opportunities to build up credit, so their credit files will be thin, placing their credit scores on the lower end of the spectrum. Some might not have credit scores at all.
Open Lending’s Lenders Protection™ program builds alternative data into credit scores so that our default predictions are 99% accurate. We also provide default insurance on the backend to ensure your credit union or bank is reaching all the consumers it can with fairly priced auto loans for borrowers and lenders.
Learn more about Lenders Protection™ here!
It's equally important to invest the time to understand what a borrower can afford. If they need to build up their credit to qualify for a loan, having credit builder programs to provide them opportunities to do so will pay them and your financial institution dividends down the road.