The unthinkable happened this year. The coronavirus put booming economies on their ear, and we are adjusting to the new normal. How do we do our part to help our members while still mitigating risk? Consumers need loans, but we can’t simply hand out money either.
Globally, the IMF projects worldwide economies will shrink by approximately 3%, with the US taking a hit of nearly 6%. While this same report projects growth in 2021, the New York Times paints a substantially more pessimistic picture, pointing back to examples from the Spanish Flu epidemic and the Great Depression. While the future is unclear, the prospects are concerning.
We must begin rebuilding our businesses and our consumers to come out stronger on the other side of this economic downturn and to help the economy boom once again. Many credit unions and community banks have been offering programs to help members by offering skip-a-pays and refinancings on auto loans and others.
Open Lending’s tagline is “Say ‘yes’ to more automotive loans,” and we can still help financial institutions do just that and safely. We help banks, credit unions and others manage their risks using alternative data and protect assets with default insurance, while still helping your borrowers. Our insurance is backed by some of the most stable insurance companies in the business, and we have a proven approach to help your financial institution thrive in this new normal.
Consumers are so much more than a credit score. The FICO Score alone and outdated analytics for deciding who’s an attractive borrower won’t work now. You must look beyond the old criteria, and that’s what Open Lending helps you do. We don’t dismiss it – FICO is very much a part of our analytics, but it’s just a piece of a more comprehensive picture we can provide your institution of potential borrowers. We leverage copious data and apply advanced analytics to make informed auto loan decisions in the blink of an eye.
Lenders also have several data points of their own, including credit scores, other loans, income and more. Let’s put that gold mine to work, so we can help even more struggling consumers, while still mitigating risk. Look at the data, use our proprietary Lenders Protection data, and then determine who’s a good risk.
We don’t believe in throwing good money after bad, but many people with a low credit score may actually be more likely to pay your loan back than someone with a higher credit score. Open Lending’s data bore that out during the 2007 housing crisis. People who are working hard to make ends meet often are more adept at scraping for work than higher-income, higher credit score members. Anyone can do better in the good times, but it shows real determination and character to do what you have to do for your family in the bad times.
Refinancing auto loans, as well as others, is an excellent opportunity for banks and credit unions right now. 1) Your bank or credit union helps the borrower, but also 2) your institution can pick up new members and customers with whom to build a relationship. And assisting them right now is a move that will drive loyalty and increased engagement over time. Help families lower their mortgage payments or consolidate high-interest credit card debt to help them to break their debt cycle.
Opportunities abound in tough economic climates. Will you take them? For further assistance in growing auto loans while mitigating risk, contact Open Lending today!