Let’s talk about the chatter around the market focused on collateral values. In my article, “Striking the Right Balance between Growth and Risk,” CU Insight, September 11, 2017, I discuss the expected decrease of values into 2018 and some of the precautions that can be taken.

While we hope the impact on values are not drastic, there are some points to consider that can be implemented to alleviate negative effects on your auto loan portfolio. In my article, I discuss:

  • Diversification of the Portfolio
  • Review Advance Guidelines
  • Periodic Review of the Auto Loan Portfolio
  • Lending to Riskier Borrowers
  • Impact of Negative Equity

This also applies to auto leasing which has been the darling of auto lending but it is not without its risks. Key concerns which I cover in my article range from:                          

  1. Who’s responsible for residual value?
  2. What is their methodology?
  3. What is your experience with your leasing partner?
  4. Do they have longevity?

It’s time to get real and doing so means taking a hard look at what your portfolio is telling you. The answers are there so you can make adjustments while still being able to participate in the lending arena.

Link to article: Striking the Right Balance.

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