The non-prime auto financing sector has undergone significant shifts over the past two years, driven by various factors ranging from market dynamics to advancements in automation and digitization. To help stakeholders navigate these changes, the 2024 Non-Prime Auto Financing Survey Report, presented in partnership by the National Automotive Finance (NAF) Association and the American Financial Services Association (AFSA), offers a comprehensive analysis of key trends and insights.
This report presents an examination of the non-prime auto finance industry performance over the last several years, drawing insights from a comprehensive survey conducted among 24 financial institutions, supplemented by corroborating data from the Federal Reserve Economic Data (FRED), anonymized Equifax consumer credit archive records, and Black Book’s used vehicle values.
The 2024 Non-Prime Auto Financing Survey Report is not just packed with valuable data but also features a wealth of interesting charts, graphs, and other visuals. These visual tools make complex information accessible and easy to understand, helping stakeholders quickly grasp key trends and insights.
Here’s a summary of the major findings from the 2022-2023 period, highlighting why this report is essential for anyone in the auto finance industry:
Originations
Despite an overall growth in non-prime auto financing portfolios, non-prime originations witnessed a decline. Credit unions experienced the most substantial loss of market share, indicating a shift in the competitive landscape. The average amount financed and the terms of loans both saw a decrease, while average Annual Percentage Rates (APRs) and monthly payments increased. Interestingly, the percentage of vehicles financed through direct channels grew, reflecting a change in consumer behavior. Additionally, fewer stakeholders are anticipating greater competition in 2024, though more than half expect to grow by up to 25% by expanding their territories and dealer networks.
Automation and Digitization
The adoption of automation and digitization in the auto finance sector has seen significant strides. There has been an increase in auto-decisioned and auto-declined applications, signaling a move towards more efficient and streamlined processes. Automated stipulations and eSignatures on documentation have also risen, enhancing the overall speed and convenience of transactions.
Loss Management
Managing losses has become increasingly challenging, with delinquency, default rates, and charge-offs all on the rise. More institutions are adopting a cradle-to-grave collection strategy to mitigate these risks. However, deficiency balance recoveries have decreased, underscoring the need for more effective loss management strategies.
Talent Management
In response to the evolving job market, more companies are offering enhanced health benefits, work-from-home options, and food services to attract and retain talent. These measures are crucial for maintaining a competitive edge in an industry that relies heavily on skilled professionals.
Costs and Returns
The costs associated with applications and contract funding have increased, alongside a rise in the cost of funds. Loan loss allowances have also seen an uptick, reflecting the heightened risk environment. Consequently, return on average assets and average equity has decreased, presenting a challenge for stakeholders seeking to maximize their financial performance.
Macroeconomic Context
Analysis of FRED data for this period revealed that vehicle sales, prices, and inventory levels continue to fluctuate, which most likely impacted the non-prime auto finance industry. Lenders had to constantly recalibrate their risk models to accommodate these swings.
Used Vehicle Market Dynamics
Black Book data showed that the acceleration of the depreciation of wholesale and retail prices continued throughout 2023 with expectations for this trend to persist. This dynamic is critical for stakeholders to consider as they evaluate the value and risk associated with non-prime auto loans.
Comprehensive Industry Data and Insights
Equifax and Black Book contributed industry-wide data while survey participants provided insights on key industry dynamics not found through other sources. This collaboration ensures that the report provides a holistic view of the sector. Equifax’s contributions present a crucial view of the non-prime auto finance industry on a larger scale and provide insights on origination volumes, types of lenders, credit quality, and overall portfolio performance. Black Book delivers extensive data on used car values and depreciation, offering insights into the dynamics of the used car market. Added this year to the survey highlights is Wolters Kluwer’s Auto Finance Digital Transformation Index, which tracks the rate at which auto dealers, service providers, and lenders are transitioning from paper-based processes to digital solutions.
Why Purchase the 2024 Non-Prime Auto Financing Survey Report?
The 2024 Non-Prime Auto Financing Survey Report provides invaluable insights into these trends, offering stakeholders a detailed understanding of the current market landscape and future projections. By purchasing this report, you will gain access to:
In-depth analysis of originations, automation, loss management, talent management, and financial metrics.
Actionable insights to help you make informed decisions and stay ahead of the competition.
Strategic opportunities for adapting to market changes and optimizing your operations.
Visual data representations that make complex information easy to understand and apply.
This report is beneficial for a variety of industry stakeholders, from financial institutions to other service providers, offering essential information to guide strategic decisions and enhance operational efficiency.
Stay informed and prepared by investing in the 2024 Non-Prime Auto Financing Survey Report. Equip yourself with the knowledge and tools necessary to navigate the complexities of the non-prime auto financing sector and drive your organization towards success.
Visit https://www.nafassociation.com/non-prime-auto-finance-survey-report for more information and to secure your report copy today.
Unlocking Insights: The Essential 2024 Non-Prime Auto Financing Survey Report
