felicitous ranice: Auto Finance Industry Sees Heightened Activity

U.S. Auto-Loan Delinquencies to Remain Low Despite Subprime Surge, TransUnion Says

Auto Finance Industry Recovers

Auto-loan performance is expected to remain strong next year, despite many lenders increasing the amount of loans to U.S. borrowers with shaky credit histories, credit bureau TransUnion said Tuesday.

Lending to so-called subprime borrowers took a dive during the 2008 financial crisis as defaults surged, but it has made a comeback over the last two years as lenders have been drawn to higher yields and improved payment performance in this segment.

The number of nonprime borrowers?a broad category that includes subprime?with outstanding auto debt reached 20.66 million in the third quarter of this year, up from 19.97 million a year earlier, TransUnion said.

Additionally, about 37% of auto-loans originations were made to nonprime borrowers in the third quarter, approaching the level of about 40% in the fourth quarter of 2007 when activity started declining, according to Pete Turek, automotive vice president for TransUnion?s financial-services business. Nonprime originations fell to a low point of about 28% in the third quarter of 2009.

?Even with these increases we?re seeing and forecasting a pretty low delinquency rate for 2013,? Mr. Turek said.

TransUnion defines non-prime borrowers as consumers with a VantageScore credit score below 700 on a scale of 501 to 990. VantageScore is an alternative to the better known FICO score.

The percentage of all borrowers at least 60 days past due on their auto-loan payments is expected to reach 0.37% in the fourth quarter of 2013, up from a forecast of 0.36% in the fourth quarter of this year. The 60-day delinquency rate was 0.38% in the third quarter, compared with 0.81% in the third quarter of 2009.

Overall, average auto-loan debt per borrower is expected to reach $14,133 by the end of next year, up from a forecast of $13,689 for the fourth quarter of this year. The average debt amount was $13,571 in the third quarter, TransUnion said.

Mr. Turek said. ?When we look out across the board across all loan products, consumers do seem like they?re valuing their auto loans and making their payments on auto loans more than credit cards and mortgages.?

Some industry watchers have lowered their performance expectations for the auto-finance market in recent months, though, citing aggressive pricing and increased competition for borrowers. Big banks, as well as nonbank lenders, have grown their auto-loan businesses in general over the last two years as borrowing on credit cards has remained tepid and housing-market issues continue to weigh on mortgage lending, despite a surge in refinancing activity.

Chinese auto consumption finance to accelerate

Volkswagen New Mobility Services Investment Co Ltd, Volkswagen Finance?s wholly-owned subsidiary, completed its acquisition of Shanghai Zhenlang Transportation Equipment Leasing Co on Jan 7, 2013, 21st Century Business Herald reported on Tuesday.

China?s market of auto consumption finance is to exceed one trillion yuan ($160.5 billion) in the next 10 years, the 2012 Auto Finance Report shows. By the end of 2011, this figure has been more than 300 billion yuan, said the report jointly issued by China Minsheng Banking Corp Ltd and Deloitte Consulting.

The penetration ratio of auto consumption finance will grow from the current 10 percent to 30 percent or higher in the next decade.

The report predicts that auto finance companies and credit card loans may contribute smaller market shares by revenue while the auto consumption finance market may expand to a size larger than one trillion yuan. Banks will see a sharp growth in personal auto consumption credit loans.

Process Manager Director (Focus on Auto Finance) | Leading Top 5 US Bank | USA

The role will have the responsibility of managing projects focussed on Enterprise, Risk and large Well-Managed projects. The role will be based around driving processes excellence for the Auto Finance group on the retail front.

Successful candidates will have to identify enhancements as well as monitor implementation and be accountable for providing training, rolls and a process strategy for the group.

The role will have to liaise closely with senior stakeholders in the project, these coming from a wide range of business lines including risk, quantitative analytics, strategy. This will allow candidates to gain an unrivalled exposure to the business and enhance their skill set.

The position will be responsible for managing a team of 8 Associated, so this will include training and being a direct report for these juniors. The group will also be expanding throughout 2013 and so headcount will be available for bringing new members to the group.

The auto finance industry suffered a severe hit in the financial crisis of 2008, but as these stories point out, recovery is well underway.

Source: http://thesevenyearplan.com/auto-finance-industry-sees-heightened-activity/

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