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Earlier this year, auto lenders assured us that the stagnating car market and an unprecedented number of off-lease vehicles flooding into used vehicle lots would coalesce into the perfect storm of unprofitability. However, despite stoking the flames of terror at the beginning of the year, automotive lenders are doing just fine.

We’re sure you’re all very pleased to read car financiers are still doing so well and have likely collectively exhaled a sigh of relief. But there’s more good news. Some of these companies aren’t just surviving, they’re thriving. Several have even reported record high profits, even though used car prices continue to fall. It may be time to pop the champagne corks, pour out the bubbly, and hoist our glasses for the financial institutions we all love so dearly.

Since the previously assumed doom for lenders was focused around the impending glut of pre-owned vehicles, there was no way used auto prices wouldn’t fall. However, thanks to the high default and repossession rate of lessees over the last few years, banks have tightened up their standards and essentially forced a bunch of people into the used vehicle market. This has kept demand higher than expected and kept the value of pre-owned automobiles from falling quite as far as anticipated.



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