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Take advantage of one of the few times of year you KNOW your customers have money for both down payments and loan payments.

The average tax refund last year was $2,869, according to Marketwatch.

As auto dealers, you know cars are only getting more expensive as manufacturers add more desirable technology and features. Tax season is a prime opportunity to target some of your prospects and turn them into buyers as they use their refunds to buy cars.

For most people, money is still very tight, and saving can be tough. According to two studies, Turbotax Free filers and the IRS VITA (Volunteer Income Tax Assistance) Program, almost half of the respondents said they needed their tax refund money for necessities, such as groceries, bills, or rent. SAMPLE

Delinquencies were increasing before the virus outbreak. What happens now? Even before the massive drop in economic activity due to COVID-19, there were signs of trouble brewing on the subprime loan side of the auto lending market. Now more than ever, it's important for subprime lenders to understand and effectively manage these delinquencies.

Subprime Loans by the Numbers

While a subprime borrower has a lower credit score and presents a greater credit risk than an average borrower, the definition of “subprime” in terms of credit score varies. For our purposes, we’ll consider subprime to be a credit score of less than 620.

Auto debt is the 3rd largest debt category in the US after mortgages and student loans. It now makes up 10% of total household debt. The Federal Reserve Bank of New York issues a quarterly household debt study and based on its most recent study, and as seen in the chart below, about 15% ($25 – 30 billion) of 2019:Q4 auto loans are considered subprime. SAMPLE

Are you using payment technology to manage your loan portfolio effectively? A 2019 Experian study shows auto loan debt is at a record high. As an auto lender, your first thought might be, “Well, of course. Cars are more expensive, and more people finance them now.”

And you’re right. But the statistic leads to more critical questions. How are you managing that debt? How is your loan portfolio performing? SAMPLE