The rate of auto loan delinquencies in the United States has dropped in this year’s second quarter according to the report by credit bureau TransUnion. Delinquency rate is down to 0.33 percent from 0.36 percent in the first quarter of this year. On a year-on-year comparison, it has dropped by 25 percent already since last year.
However, analysts from the reporting body TransUnion and another credit bureau Experian Automotive both said that the delinquency rate on auto loans will not continue to drop until the next quarter of this year but assured that it will still remain to be low.
The study found that borrowers have learned to put their car payments on top of their other credit obligations since the recession. This is because auto loan borrowers deem their cars as necessary and important for them to continue running their daily errands.
So, as a dealer, how should you respond to this recent trend in the auto lending aspect of the industry? Here are some ideas:
Stay online. If you are satisfied with the results you’re getting from your lead generation and general F&I efforts, keep being on the lookout for more finance auto leads in the Internet for they are surely coming in. The results of the TransUnion report might be telling you that borrowers are getting late in their payments less so there is really nothing to be so afraid of in dealing with them. In fact, an analyst from the credit bureau himself said that loans are gearing toward nonprime borrowers more. Stay where you are getting your finance auto leads from and focus on closing these deals.
Don’t play favoritism. Subprime leads are indeed hot in the industry now but it does not mean that you should only fix your eyes on them. Consider all kinds of borrowers and make sure you are not giving too much attention to one in expense of another.
Review your strategies. Do not be so satisfied if your lead generation and sales tactics are working well. Be reminded that you should review your plans and strategies regularly and see if they are still in-tune with the current behavior of consumers and the competition in the industry. Perhaps you can think of new tactics considering that borrowers now are more responsible with their car payments.
The decline in auto loan delinquencies is good news for the whole automotive industry. It encourages auto lenders to accommodate more borrowers and makes auto loan approval easier for borrowers. Keep track with the trends and find out where they might be pointing you.Tags: auto leads, finance auto leads, finance leads