The latest industry overview from the leading auto loan refinance company
Mannheim used car value index October 2022
ENGLEWOOD, CO, Nov. 15, 2022 (GLOBE NEWSWIRE) — iLending, a national leader in automotive refinancing, is pleased to announce the second installment of our report on the state of the auto loan refinancing industry. These insights are released quarterly and are based on our internal data combined with industry and consumer intelligence. The intent of the publication is to provide meaningful insight for those interested in the auto loan refinance market, as well as consumers who may be considering refinancing their existing car.
August’s iLending Industry Insights highlighted that inflation was at a 40-year high coupled with historically high new and used car prices. This has put pressure on financing car purchases, and for 2022 new car sales are expected to be below 14 million units, a full 20% below an average year. However, the auto refinancing space remains robust. The number of lenders looking to add auto loans to their balance sheets remains high, and consumer demand is just as strong given the everyday financial challenges Americans face.
“What we’ve seen is sluggish auto sales all year round and they’re likely to remain low in the near term. These are levels typically associated with a recession,” commented Tom Holgate, CEO of iLending. “On the plus side, new car inventories are showing signs of picking up amid increasing chip supply for automakers. The overall environment is gaining ground, it’s about focusing on putting one foot in front of the other, which takes time.”
used car prices
Despite a difficult year for used car buyers, the trend over the past few months shows a steady trend reversal. The Manheim Used Car Index indicates that wholesale used car prices fell sharply again in October, making nine out of 10 months of declines this year. The latest numbers show a 15.3% year-to-date decline and a 10.3% year-on-year decline.
new car inventories
New car inventories are beginning to build up as production is finally starting to catch up. According to MarketWatch, the tug-of-war between manufacturer supply and consumer demand continues to weigh on Americans’ wallets with an average new car cost of $48,301 in August. The good news is the significantly improved supply of car dealer inventories of 1.23 million new cars in stock. Inventory hasn’t been at this level since June 2021, almost a third up year-on-year but still pales in comparison to the pre-pandemic level we had in August 2019 of 3.45 million units.
Production needs to be further improved to keep up with demand. Increases in the number of new cars paired with a noticeable drop in the price of used cars are both promising signs of a recovery in the automotive industry. This dynamic is being weighed down as consumers slow down purchases of expensive items with inflation not seen in decades. Demand for new and used car purchases is also being dampened by rising interest rates.
The year was marked by action by the Federal Reserve in hopes of keeping inflation under control. Rate hikes are expected to continue if inflation persists. This has led to rising subprime write-offs and the total number of borrowers over 60 days past due nearing an all-time high. TransUnion, which tracks more than 81 million auto loans in the United States, announced on Tuesday, 11/8/2022 that the percentage of loans that are at least 60 days past due hit 1.65% in the third quarter, the highest rate for 60-day delinquencies for more than a decade. The subprime category is widely perceived as a Fico credit score below 620. This particular class of loans has seen fewer loans from lenders, suggesting that they expect higher auto loan defaults due to the economic slowdown in this group. The combination of these factors results in a significant number of subprime consumers being unable to obtain new or used vehicles.
Midterm elections and the economy
The pending results of last week’s midterm elections have shown that US voters have been heavily influenced by economic conditions and it remains to be seen whether shared control of Congress will hurt consumer confidence and quell stubbornly high inflation. Over 80% of voters saw the state of the economy as a “very or very important issue” for the newly elected Congress to address. Although inflation has eased marginally from the June high of 9.1%, it is still at levels that are not considered healthy and remain alarmingly high. The question remains whether future action by Congress will reflect the much-needed financial responsibility to steer us back onto calmer waters.
Based on the above factors, iLending believes the opportunity for consumers to qualify for refinancing their existing auto loans and save money is: Strong for mid and subprime borrowers and challenging for prime borrowers due to higher interest rates.
Additionally, the ability to save money is in greater demand today than ever due to rising costs for housing, groceries, fuel, and household goods. Despite the rising interest rate environment, iLending can continue to help Americans save money on their monthly car payments and boost their cash flow at a critical time. Focused solely on auto loan refinance, iLending offers the simplest, fastest, and most secure process available.
Founded in 2006, iLending is the nation’s leader in auto refinancing. Consumers save an average of $145 per month on their car payments. iLending has helped over 134,000 families save more than $211 million in vehicle payments. Additionally, iLending reduces interest rates for its customers by over 7% on average, saving millions of dollars in unnecessary interest costs.
Through a world-class process and strategic partnerships with lenders across the country, iLending offers terms consumers cannot find on their own. iLending exists to empower consumers by reducing financial stress and improving security. We are a BBB accredited company and receive an A+ rating. www.ilendingdirect.com
CONTACT: Kevin Hubbard iLending 3037082869 email@example.com