- The market would not have seen the growth of 2015 and 2016 without credit and its availability. Most people finance their purchase, but there has been a deterioration in lending. This means that more "loose credit" loans were issued during 2015-2016. This is a trend that we will likely see going away as banks tighten their loan standards.
- The trend of longer loan terms has been growing and there is a likelihood to continue to see longer terms on loans (i.e., longer than 60 months). Consumers in this borrowing situation are more likely to be at risk of being "under water" at some point, which could impact future vehicle purchases.
- We are currently at a very low default rate – a 14-year low as of June 2017 to be exact – and we will likely see this healthy default-rate level to continue. Lenders will continue to lend, but they may be more skeptical of sub-prime borrowers who enter into loans with no down payment and longer loan terms.
As we look at the record level of auto sales in 2015 and 2016, there is no question that the market would not have seen such growth if not for the substantial correlative growth in lending. In this video, Jonathan Smoke, Vice President of Research & Market Intelligence at Cox Automotive, unpacks automotive lending and what trends may be lying around the corner.
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