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A report from Experian Automotive finds that credit challenged customers owned 15.1 percent of the new vehicle loans extended during the second quarter of this year, down from 22.1 percent in the same quarter of 2013. Similarly, subprime borrowers accounted for 40.2 percent of the used car loans, compared with 50.6 percent last year.
“Although we’ve seen relative stability in the automotive industry the past several years, lenders are still showing cautionary signs when lending to the subprime market and keeping their risk at manageable levels,” notes Melinda Zabritski, Experian’s senior director of automotive finance. While that may be true, both new vehicle subprime loans and used vehicle subprime loans are still up from their 2009 recession levels, when they made up just 10.2 percent and 39 percent of the overall distribution.
After the recession, dealers and lenders were desperate for new business, and often let borrower requirements lapse. This helped them increase sales, but it also exposed them to messy defaults and repossessions. Many businesses failed to protect themselves properly with a collateral management system, and they paid a significant financial price as a result.
For BHPH dealers and lenders who continue to specialize in subprime and deep subprime financing, it’s imperative that you don’t make the same mistake. A collateral management system like GoldStar GPS gives you unprecedented ways to manage your assets, and insight into your business.
It’s exactly the kind of protection you need.