Extending Terms, Leasing, External Portfolio Purchase are Top-Of-Mind for Lenders
LAWRENCEVILLE, GA (May 2, 2016) – Black Book® today released results of its recent survey taking the pulse of the lender community on the strength of the automotive market, use of data and their outlook for 2016. Black Book Lender Solutions surveyed dozens of automotive lender executives during February, 2016, and found that roughly a third of lenders believe loan balances will plateau in 2016, and interest rates will see a steady climb to 2008 levels. Here are complete results of the survey.
- 35.48% believe loan balances will plateau in 2016
- If loan balances remain flat, loan profitability is priority for majority (35.48%)
- Most will focus on extending terms or explore leasing if fewer loans booked in 2016
- 38.7% of lenders are now conducting monthly portfolio analysis
- 52% of lenders are likely or somewhat likely to look for external portfolios for purchase
1: What do you expect to happen to loan balances in 2016?
Plateau – 35.48%
Decrease – 3.23%
Continue to increase – 61.29%
2: If growth in the market does not continue and loan balances remain flat or decrease, what is your biggest concern?
Market share loss – 16.13%
Loss of interest income – 12.90%
Focus only on loans that yield maximum profitability – 35.48%
Want to maintain market share but will book fewer loans – 19.35%
Other – 6.45%
3: What is your strategy for profitability if you book fewer loans in 2016? Check all that apply
Alter parameters of your program guidelines – 22.58%
Consider different geographic markets – 19.35%
Look for profitability by extending terms – 29.03%
Organic growth through marketing to current customers – 25.81%
Explore more alternative finance options such as leasing – 29.03%
4: What is your expectation for interest rates in 2016?
Low rates – 67.74%
Steady climb to 2008 levels – 32.26%
Steep drastic incline – 0.00%
5: What data are you leveraging currently to navigate the changing market?
Real time data – 64.52%
Longer term residual forecasting – 35.48%
6: How important is collateral data to you currently?
It will become more important in the next 6 months – 25.81%
We’ve already started to leverage collateral data for our portfolios – 32.26%
We’re relying on collateral data more for residual forecasting – 22.58%
It’s not very important to me – 19.35%
7: How frequently will you do a portfolio analysis in 2016?
Weekly – 16.13%
Monthly – 38.71%
Quarterly – 35.48%
Annually – 9.68%
8: If your portfolio is shrinking, how likely is it that you will look for external portfolios to buy?
Not likely – 16.13%
Somewhat likely – 25.81%
Likely – 25.81%
Extremely likely – 9.68%
Very likely – 6.45%
N/A – 16.13%
9: How likely are you to mine your current portfolio for additional organic growth?
Not likely – 19.35%
Somewhat likely – 9.68%
Likely – 41.94%
Extremely likely – 16.13%
Very likely – 12.90%
10: Options you would consider for altering parameters. Check all that apply
Expanding credit eligibility criteria – 57.14%
Financing older model vehicles – 57.14%
Extend loan terms – 42.86%
Other – 28.57%
About Black Book
Black Book® is best known in the automotive industry for providing timely, independent and accurate vehicle pricing information, and is available to industry-qualified users through online subscription products, mobile applications and licensing agreements. A leading provider since 1955, Black Book has continuously evolved to ensure that it achieves its goal of delivering mission-critical information to its customers, along with the insight necessary to successfully buy, sell, and lend. Black Book data is published daily by National Auto Research, a division of Hearst Business media, and the company maintains offices in Georgia, Florida, and Maryland as well as the Canadian Black Book in Toronto. For more information, please visit BlackBookAuto.com or call 800.554.1026.