In Forth Worth Texas a study conducted between February and April 2014 regarding loan terms suggested that terms are getting longer and scores are getting lower each year. The study was done by the National Automotive Finance Association and used sub-prime lenders as their testing group.
The article covers the key findings of the study addressing them in a comprehensive but decisive bullet format. An auto finance program director named George Halloran of Benchmark Consulting said two-thirds of the people surveyed had a decline in return and a very small percentage had a negative return while some continued being profitable. The survey provided the data from which they were able to determine that loan loss allowance was up by 38 basis points while there was no change to the cost of funds. This indicates the improved collection effectiveness can continue while achieving lower results. The article goes on to provide a fascinating look at the way that younger consumers will affect auto finance but not to worry, for now loan availability is stable.
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