While the effects of COVID-19 have rippled through multiple sectors of the economy, the number of auto loans in the U.S. hasn’t changed much from pre-COVID days. According to Experian, the average consumer auto-loan debt grew by a mere 2 percent, the same increase as 2019.
Additionally, the percentage of consumers’ auto loans that were 30 or more days past due decreased by 22 percent in 2020. Unlike other debt types (i.e. mortgage, student loans), there has been no federal consumer debt relief for auto loans during the pandemic, and any decision to modify repayment of auto loans was left to individual creditors. Since there was no federal relief plan in place for auto loans, accommodations for mortgage and student loan payments may have contributed to consumers’ ability to make their car payments on time, Experian says.
But even with the decrease in delinquent accounts during the pandemic, a Q4 2020 report from Experian states that close to 20 percent of Americans still have subprime credit scores (FICO scores ranging between 580 and 669). This means approximately 66 million Americans are considered to have bad credit, many of whom may be denied approval for car loans and financing due to their poor credit history.
Given the recent trends in auto finance, what opportunities are available for your car dealership?
If your dealership currently does not offer subprime financing, you are missing out on a market of approximately 66 million consumers who may be getting denied for auto financing by traditional lenders and finance companies due to a poor credit history.
Enrolling in the Credit Acceptance program will position your car dealership to approve car buyers with bad credit or no credit for financing on nearly any new or used vehicle, which means more car sales and profit for your business.
If your car dealership is looking to reach more customers and sell more cars in your market, fill out the form on our website to learn the benefits of becoming an enrolled dealer in our auto finance program!
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