Mar 1, 2022
Projections for car loans are looking up this year despite the continued pandemic-induced inventory struggle.
Transunion predicts auto loan originations to rise from 2021’s 28.3 million to 28.9 million in 2022, despite inventory issues. The growth is expected to come from expanding underwriting to extend more loan offers to nonprime borrowers. Nonprime loan originations are expected to increase from 9.4 million in 2021 to 10 million in 2022, yet delinquency rates are forecast to hold steady at 1.51% through 2022.
Satyan Merchant, the senior vice president and auto business leader at TransUnion said, “Overall, auto originations are expected to remain flat as vehicle supply shortages challenge sales growth. However, consumer demand for vehicles has not waned, and as we see inventory increase, this will likely influence origination growth. Lenders are also eager to return to lending and will expand into the non-prime segment of the market to meet consumer demand – especially as consumer performance has remained strong.”
Pent-up consumer demand is clearly demonstrated as average new vehicle prices rose about $6,000 between 2020 and 2021, as well as used vehicle prices projected to surpass $30,000 in 2022. To better meet demand, lenders will expand who they’re making offers to, and the nonprime borrower market may be safer to pursue as the economy stabilizes and the COVID-19 pandemic’s impact wanes.
“The economy is normalizing and continues to expand, and those signs of renewed strength are encouraging lenders to not just focus on the least risky consumers but to provide greater access to those persons that may be viewed as higher credit risks,” Charlie Wise, head of global research and consulting at TransUnion, concluded.
With Open Lending’s Lenders Protection™ your institution can do just that: improve access to auto loans for nonprime borrowers while also mitigating risk to your institution. Lenders Protection™ offers proprietary data analytics to help determine the best credit risks and pricing, that’s backed by default insurance, so Open Lending can help you grow auto loans in the nonprime market.
Prepare for the high demand for auto loans as the auto industry makes progress expanding inventory by offering more loans to nonprime borrowers. The auto finance industry is projected to have a healthy 2022. Take advantage of this and grow your vehicle lending volumes now!Share
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