iLending Industry Insights – state of auto/car loan refinance
The Latest Industry Overview from the Top Car Loan Refinance Company
DENVER, CO (November 15, 2022) — iLending, a national leader in automotive refinancing, is pleased to announce the second installment of our report on the State of the Car Loan Refinance Industry. Published quarterly, these insights are based on our internal data coupled with industry and consumer information. The intent of the publication is to provide meaningful insight for those interested in the auto loan refinance market, as well as for consumers that may be considering refinancing their existing auto.
August’s iLending Industry Insights highlighted how inflation was at 40-year highs, coupled with historically high new and used car prices. This has put pressure on car purchase financing, and for 2022 new car sales are expected to be below 14 million units, a full 20% below an average year. However, the auto refinance space continues to be robust. The number of lenders that are looking to add auto loans to their balance sheet remains strong and with the everyday financial challenges facing Americans, consumer demand is equally strong.
“What we’ve been witnessing are sluggish car sales throughout the year, and they’re likely to remain low for the short term. These are levels typically associated with a recession,” commented iLending CEO Tom Holgate. “On the brighter side, new car inventory shows signs of edging higher given an increasing chip supply for car manufacturers. The overall environment is gaining ground, it’s about staying focused on putting one foot in front of the other, which will take time.”
Used Car Prices
Despite what was proving to be a rough year for those looking for a deal on a used-car purchase, the trend during the past few months point to a steady reversal. The Manheim Used Car Index indicates wholesale used-vehicle prices seeing a large decline once again in October, making it the nine out ten months showing a decline this year. The latest numbers show a decrease of 15.3% year to date and a year-over-year decrease of 10.3%.
New Car Inventories
New car inventories are starting to build as production is finally beginning to catch up. According to MarketWatch, the tug-of-war between manufacturer supply and customer demand continues to take a toll on Americans’ pocketbooks with the average new car cost of $48,301 in August. The good news is the marked improvement in supply with car dealer inventory at 1.23 million new cars in stock. Inventory has not been at this level since June 2021, nearly a third higher than the previous year, but still paling in comparison to pre-pandemic levels we had in August of 2019 of 3.45 million units.
Production will need to continue to improve to catch up with demand. Gains in new car inventory levels paired with tangible used-car price drops are both promising signs for an automotive industry recovery. This momentum will be weighed down due to consumers putting the brakes on purchasing big-ticket items with inflation at levels not seen in decades. Demand for new and used car purchases will also be tamped down as interest rates continue to climb.
The year has been marked by the Federal Reserve taking action in hopes of keeping inflation in check. Interest rate hikes are anticipated to continue as inflation endures This has led to increasing subprime write-offs, as well as the overall number of borrowers more than 60 days past due trending upward to an all-time high. TransUnion, which tracks more than 81 million auto loans in the U.S., said Tuesday 11/8/2022 the percentage of loans that are at least 60 days delinquent hit 1.65% in the third quarter, the highest rate for 60-day delinquencies in more than a decade. The subprime category is widely perceived as a Fico credit score below 620. This particular credit bucket has received fewer loans by lenders, indicating they are anticipating higher levels of car loan defaults from the economic slowdown from this group. The combination of these factors translates to a considerable number of subprime consumers unable to get vehicles, new or used.
Midterm Elections and the Economy
The pending results of last week’s midterm elections proved American voters were heavily swayed by the state of the economy and it remains to be seen if split control of Congress will impact consumer confidence and quell stubbornly high inflation. Over 80% of voters considered the state of the economy as an “extremely or very essential issue” for the newly elected Congress to confront. Although inflation has marginally subsided since June’s 9.1% high, it is still at a level that’s not considered healthy and remains alarmingly high. The question remains if Congress’ future actions will reflect the much-needed fiscal responsibility to steer us back to calmer waters.
Based on the factors above, iLending believes the opportunity for consumers to qualify for and save money by refinancing their existing auto loans is: Strong for mid- and sub-prime borrowers and Challenged for Prime borrowers due to increased interest rates.
Additionally, the ability to save money is needed now more than ever due to rising costs of housing, groceries, fuel, and household goods. Despite the rising rate environment, iLending remains able to help Americans save money on their monthly car payment and increase their cash flow at a critical time. Solely focused on car loan refinance, iLending has the easiest, quickest, and safest process available.
Founded in 2006, iLending is the national leader in car refinancing, saving consumers an average of $145 per month in car payments. Through a best-in-class process and strategic partnerships with lenders nationwide, iLending offers terms that consumers cannot find on their own. iLending exists to empower better financial lives by reducing burdens and improving peace of mind. We are a BBB Accredited Business and maintain an A+ rating. www.ilendingdirect.com