6 Takeaways From Consumer Reports' Car Loan Investigation

Driven by convenience and low advertised rates, consumers are likely to choose to finance their vehicles through indirect lending at the dealership. However, there are potential pitfalls that consumers should be aware of including inflated interest rates, unfavorable loan terms, predatory lending practices, and hidden fees—just to name a few. 

With auto loan debt in the United States surpassing $1.4 trillion, it's crucial to understand the risks associated with borrowing for a vehicle. According to Consumer Reports' analysis of nearly 858,000 auto loans, borrowers are often paying more than they should, with interest rates varying widely even among consumers with similar credit scores. This points to the likelihood of personal judgment and bias informing interest rates rather than objective underwriting. This inconsistency in lending practices raises concerns about the lack of fairness and transparency in auto lending.

Another striking revelation from Consumer Reports' investigation is that even consumers with excellent credit scores may find themselves saddled with inflated interest rates, suggesting that dealers and lenders might be charging what they think they can get away with rather than solely considering risk. Additionally, many borrowers are burdened with loans they can't afford, with nearly 25% spending more than 10% of their income on car debt, increasing the risk of default and repossession. It's clear that these practices impact consumers negatively but they also cause knock-on effects on the capital markets and highlight the need to be vigilant when navigating the auto lending landscape. 

To learn more about the findings from Consumer Reports' investigation, read the full article here: https://www.consumerreports.org/money/car-financing/takeaways-from-consumer-reports-car-loan-investigation-a7711549994/

DCG’s 40th Annual Balance Sheet & Model Risk Management Conference - June 10-11, 2024 in Boston, MA

• Check out our detailed schedule that delves into our industry’s most pressing challenges and opportunities.
• Celebrating its 40th year, the DCG Balance Sheet & Model Risk Management Conference features 44 sessions devoted to Balance Sheet and Model Risk Management, 40+ dynamic speakers, and peer discussions. Attendees are also eligible to earn up to 15 CPE credits.

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Webinar: Delivering a customer experience that thrives under pressure

How can your institution deliver exceptional customer experience? You need to enable yourself to support them whenever and wherever they need it, even in times under pressure - like a massive online banking conversion!

Loan Data Coffee Talk

Friday, May 3rd at 10:00am – 10:45am ET

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Join us as we dive deeper into how clients are using IntelliCredit to respond to questions from regulators, their Board and management. With easy access to their loan data (something that is virtually impossible with their core system), we'll share how they are gaining a better understanding of the subsets and concentrations in their portfolios, and arming their team to proactively explain and defend their bank's position.

A Great Opportunity to be Recognized for Your Innovation 

Jack Henry recently introduced a new annual recognition program that celebrates innovative financial institutions and fintechs. The Cobalt Awards Program is unlike any other in the industry. Learn about the submission categories and how you can win $10,000 towards the charity of your choice (and more). Submissions are open until June 1st.

[Infographic] Are you effectively serving the SMB market?

Although SMB applications are at an all-time high, both new loan requests and approval rates have dropped. Learn how you can more effectively, safely, and profitably serve the SMB market by focusing on smarter credit decisions and proactive risk management in our new infographic.