Auto & Powersports Finance News
April 19, 2017
Top Stories

First Associates Loan Servicing, the nation's fastest growing loan servicer, announced today that the company has been assigned a MOR RV1 Residential Vendor Ranking as a Consumer Finance Servicer from Morningstar Credit Ratings, LLC, New York with a forecast of stable.

Along with offering a glimpse into some overall quarterly metrics, S&P Global Ratings reported that collateral performance in the U.S. prime and subprime auto loan asset-backed securities (ABS) sectors improved in February, relative to January.

It's a good time to be a car buyer. Dealers are offering the biggest discounts since the Great Recession, and a combination of historically low gas prices and improvements in fuel efficiency mean consumers can upgrade from cars to SUVs without forking over a huge chunk of their paycheck to gas stations each month. But the story is entirely different for U.S. carmakers and dealers. Although the auto industry has enjoyed record sales recently, there are early signs that the party could soon be over.

Defaults on subprime auto loans and other types of credit may be poised to jump higher - and the profile of the defaulting borrowers may come as a bit of a surprise. UBS said in a note published recently, cited by Seeking Alpha, that the total consumers who expect to default on these loans is up by five percentage points. That jump is one that has been logged since September 2016. The typical profile? Younger buyers, who are male and whose income skews toward middle- and upper-income. Geographically speaking, they live in the coastal regions of the United States.

Captive finance arms offer a "pretty big competitive advantage" for powersports OEMs, particularly in an environment where independent finance companies are "coming and going," James Hardiman, managing director of equity research at Wedbush Securities Inc., told Powersports Finance. 

Only five years ago it seemed that always-connected millennials would opt for car-sharing and ride-hailing services like ZipCar and Uber over vehicle ownership to meet their transportation needs. However, recent studies indicate that young consumers are beginning to seek auto loans at a rising pace. A 2016 study conducted by LendingTree found that 33 percent of all loan requests on their online loan platform came from applicants age 34 and under, up from 27 percent in 2013.


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