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Lenders Use a People-Centric Approach Through Pandemic

At DRN’s Virtual Showcase in October 2020, we hosted leaders from across the auto lending industry to discuss how their organizations weathered the COVID-19 pandemic. Our team of experts included:

  • Danielle Arlowe – SVP, American Financial Services Association (AFSA)
  • Chuck Blommaert – VP Loan Servicing, Flagship Credit Acceptance
  • Anthony Capizzano – SVP & Chief Product Owner/Formerly Head of Customer Onboarding, Bank of the West
  • John Urness – Managing Director Loss Mitigation & Remarketing, Bridgecrest
  • Melinda Zabritski – Senior Director, Experian
  • Wendy Sousa – Second Vice President, Allied Finance Adjusters
  • Stephen Nethery – SVP Business Development and Client Service
  • Jeremiah Wheeler – EVP and General Manager, DRN

COVID-19’s impacts on the world of auto lending were significant but also fairly short-lived and not necessarily detrimental. Loan volumes fell to around 30% versus prior year in March 2020 as lockdowns and moratoriums began, rising to 50% by April. Volumes have continued to recover since April, due largely to dealer and lender incentives including longer loan terms – up to 84 months in some cases – and 0% APR. These brought many consumers back into the lending space, especially with captive lenders. Leasing saw a more severe impact, with a more than 6% drop in the second quarter of 2020 compared with 2019.

Perhaps surprisingly, average credit scores rose, resulting in growth in prime and super-prime categories. Conversely, subprime and deep subprime markets shrank down to an eight-year low. Loan amounts, terms and monthly payment amounts continue to be at record highs. In addition, demand increased for used vehicles as inventory of new vehicles was challenged during the pandemic. 

According to Experian, “Despite unemployment rapidly growing to record levels throughout the U.S., the average amount of individual debt has consistently declined since the onset of the pandemic. Average credit scores are increasing at a higher rate than during this same period last year, and credit utilization—how much available revolving credit a consumer is using—is at a record low for the past five months.”

From January 2020 to May 2020, average total debt balance shrank by 1% and average credit card balances decreased by 14%. These numbers show that consumers made significant changes to their spending and saving habits in the early months of the pandemic. Going forward, these habits likely will continue to change as economies reopen and financial relief options begin to diminish.

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About the author:

Stephen, Senior Vice President of Business Development and Client Services, leads all sales and client services activities for DRN’s FinTech business. With more than 18 years of experience in business development and client services, he works with lenders to improve their collections and recovery strategies by optimizing DRN’s vehicle location data to fit each client’s needs and impact revenue goals.

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