Canadian Automotive Financial Institutions, this is for you!
Equifax discusses 6 best practices amid subprime origination decline. They are:
1- Need for speed in underwriting for lenders.
2- Best practices to make sure you get the right offer back to the dealer while mitigating risk.
3- Ensure customer is who they say they are.
4- Ensure you understand the customer’s financial capacity (verifiable income and employment through real-time databases).
5- Look at your portfolio and get ahead of the process to engage with customers for the right buying decision.
6- Looking at the process to see where you can automate more.
Learn how Lucy and YULDrive can help your dealers do better with Subprime and help you finance more clients!
Equifax discusses 6 best practices amid subprime origination decline
ATLANTA – Not only did Automotive Intelligence Council member Equifax share its latest data about how originations are trending, vice president of automotive marketing and strategy Jennifer Reid also delved into six best practices that could help finance companies of all sizes.
Even as subprime originations slow to the lowest level Equifax has seen in more than five years, Reid maintained in this video that there are several facets of business that finance companies can sharpen, including:
• Need for speed in underwriting for lenders.
• Best practices to make sure you get the right offer back to the dealer while mitigating risk.
• Ensure customer is who they say they are.
• Ensure you understand the customer’s financial capacity (verifiable income and employment through real-time databases).
• Look at your portfolio and get ahead of the process to engage with customers for the right buying decision.
• Looking at the process to see where you can automate more.
Reid arrived at those assertions not long after Equifax shared its data as reported through April.
Through the first four months of the year, Equifax indicated 7.96 million auto loans had been originated, totaling $183.9 billion. This data represented a 0.3% decrease in accounts and a 2.3% increase in balances year-over-year.
Equifax said retail installment contracts constituted 86.6% of all auto account originations and 89.8% of all auto origination balances through April.
Analysts found that 1.81 million auto loans have been originated through April to consumers with a VantageScore 3.0 credit score below 620. These individuals are generally considered subprime accounts. The volume marked a 1.8% decrease year-over-year. These newly issued contracts have a corresponding total balance of $33.6 billion, a 1.8% increase year-over-year.
Through the end of April, Equifax determined 22.7% of auto loans were issued to consumers with a subprime credit score, accounting for 18.3% of origination balances. In the same time a year ago, the account share was 23.1% and balance share was 18.3%.
Analysts went on to note the average origination loan amount for all auto loans issued in April was $23,659. This figure is a 4.5% increase over April of last year. The average subprime loan amount was $19,304, which is a 6.1% increase compared to April 2018.
“While overall auto sales have fallen slightly compared to the previous year, we’re seeing active and interesting trends in auto loan originations through April,” Reid said in analysis shared with SubPrime Auto Finance News.
“In particular, while subprime activity continues to grab headlines, it is interesting that the percent of subprime to the total originations are at the lowest level dating back to the end of the recession,” she continued.
“Furthermore, we will keep a watchful eye on lender activity, as it appears lenders are tightening up in the under-620 credit score bucket for both lease and retail contracts,” Reid went on to say.
Equifax also will be among the companies bring their experts to share insights during Used Car Week, which begins on Nov. 11 at the Red Rock Resort in Las Vegas. Early Bird registration discounts are available through Oct. 1.
The complete agenda and other details are available at www.usedcarweek.biz.