How normal is the "new normal"? Will your bank or credit union be able to adjust and keep up with the consumer borrowing trends or will you be left behind? Let’s re-evaluate how your institution is reinventing the wheel in order to keep auto lending home with you!
With consumer borrowing numbers gradually getting back to normal, community financial institutions must leverage this limited opportunity to implement new systems and rethink how to offer credit to more members. It is time to go back to the drawing board and consider things such as a marketing push, outsourcing new partnerships, and offering new forms of credit to keep up with non-traditional lenders such as eCommerce players, like Amazon.
According to The Financial Brand, “Oxford Economics anticipates that consumers will begin tapping into the savings built up during the pandemic as 2022 approaches. That said, the firm’s research indicates that higher-income people hold most of the savings that remain from the COVID period. This suggests that many other people will need a healthy dose of credit.”
What does this mean to consumers seeking auto loans who don’t necessarily have prime credit?
For those near- and nonprime borrowers, it means lenders will have to look at alternative credit data to assess the risk, and then take it. It might also mean the possibility of higher interest rates, getting someone to cosign for a loan, meeting a minimum monthly income requirement, or coming up with a down payment via trade-in equity, cash or a combination of both. There may be additional steps to this type of loan, but hopefully, your financial institution can streamline the process and get consumers on their way to buying a car!
What does this mean for community financial institutions?
You must be able to compete digitally and deliver a fast response to consumers desiring auto loans with the same experience, prime or not. The pandemic has taught us and continues to teach us that being digitally prepared is paramount to success. The overall desire for instant gratification can’t be ignored. Here is where outsourcing to a third-party automated lending service can be extremely beneficial to smaller institutions that don’t have the time nor resources in-house.
How can you set your bank or credit union up for success?
An obvious degree of risk follows this type of lending. When it comes to near-and nonprime borrowers, the risk is naturally greater. Here is where our Lenders Protection™ program can assist in managing that risk. This program has helped hundreds of lenders capture more vehicle loans from existing loan application flow to serve more members with challenged credit. Our product provides a safe way for lenders to increase near- and nonprime auto loan volumes and auto yields while mitigating risk in your loan portfolio.
Let us help your institution mitigate risk using our proprietary, advanced data analytics and default insurance coverage, so you can say ‘yes’ to more auto loans today!