Company News, Compliance, Remarketing

Experian Dashboard: Many Americans Still Planning Auto Purchase

Experian has created a dashboard to track consumer sentiment during COVID-19. A review of the data shows that 20 percent of Americans are still considering a vehicle purchase in the next few months.

It also reveals that this comes at a time when 46 percent of Americans are experiencing a financial hardship. While some of these 20 percent who plan to purchase a vehicle have changed their plans to a degree (lower cost, lease vs. buy or delay purchase), it does indicate that most still plan to move ahead.

As a loan servicer with specialization in the auto finance space, Servicing Solutions is committed to staying on top of current market conditions and trends, and this study stood out to us. We’re happy to provide a recap of some of our executive leaders’ interpretation of this study.

Louis Ochoa, President and CEO

“To combat lower new car sales during the pandemic, captive automobile finance companies have come out with very attractive incentives with no payments for 3 to 6 months and zero percent APRs. This makes it increasingly more challenging for independent auto finance companies to compete. There certainly is, and always will be a market need for independents, but they will need to be more creative with their offerings.”

Paul Marquez, Vice President of Asset Recovery
“This has the potential to have a big a big impact on the wholesale market, especially as manufactures increase incentives and lower APR’s on new cars. This will limit the demand on 2-3-year-old off lease vehicles at auction. Typically, February through March is the peak of the car market, and we missed this due to COVID-19. My advice is with auctions coming back (online sales for now), start to move inventory to limit deprecation, market volatility, and to increase your retention rates as much as possible.”

Robert Caracciola, Chief Compliance Officer
“With the COVID-19 situation not being over by any means, this certainly impacts how lenders should handle their compliance efforts. While it is good news that consumers still have the confidence to take on new debt, I would argue lenders need to remain prudent in their lending practices right now, especially when it comes to subprime lending, especially in the midst of a quickly changing landscape of regulations and guidance related to collections / repos.”

Garrett Cline, Vice President of Sales

“While financial institutions will need to apply a little more scrutiny as they assess the risk associated with funding these transactions, it does enable the auto industry to continue to move forward during these challenging times, and emerge stronger because these new methods of purchasing are not going away anytime soon. In fact, they will likely drive more change in the industry with virtual sales and delivery by more traditional brick and mortar dealers.”