White Paper: Managing your auto loan portfolio risk
What percentage of your portfolio is actually underwater?
PLANTATION, FL (October 11, 2016) — Of course, the most common answer from risk managers is “an acceptable level”. It’s always difficult to see the potential problems when times are good. And for many credit unions, auto lending has been at or near record levels in 2016. Employment is up, interest rates and gas prices are down, and life is good in credit union land. But lurking under those warm rays of sunshine are warning signs.
Statistics show that it’s pretty easy to acquire loans in this economic environment. However, what if there is a downturn? No one could have predicted the intensity and duration of the Great Recession and its affect on both lenders and borrowers. Sure, policies have changed, become more conservative, but have they evolved to stand up to this new threat to CU portfolios?
Basically 100% LTV isn’t really 100% LTV all of the time. Depreciation on many vehicles has increased, and on certain vehicles has almost doubled. Average loan term durations are on the rise. GAP claims have increased by an unprecedented 50% in just the past year. And there is much, much more.
What does this mean for the overall portfolio? Have these factors adversely affected credit union’s risk guidelines?
We live in an economy where a significant event anywhere in the world can cause financial tremors. Oil prices rise and fall; terrorism rears its ugly head; entire populations have become homeless and are flooding into and causing economic strain on those countries opening their doors. Instability has become the new status quo.
GreenProfit Research for Credit Unions has developed a white paper to provide an overview of 1) the economic, regulatory, and technological changes over the last 10 years that have precipitated these changes; 2) their significant impact on auto lending; and 3) what to expect in the next 10 years.
While many CU’s are reporting record growth in auto lending, it is important to be aware of
the “warning signs” that could negatively impact both members and portfolios. Understand the industry challenges and learn 7 major takeaways on how to keep members and your portfolio above water.
Download your free copy today: http://cuzoom.org/white-papers/managing-auto-loan-portfolio-risk/.
About GreenProfit Solutions, Inc.
GreenProfit Solutions, Inc. is the market leader among credit unions for driving revenue while fulfilling the credit union mission. Through our cuZoom end-to-end car loan product suite and EconoCheck value-added checking accounts, GreenProfit Solutions serves many of the nation’s largest credit unions. Additionally, our Learning Library is the most comprehensive, unbiased source for educational information on products, operations and efficiency.