Assessing the Industry’s Growth Spurt
There are a growing number of indicators, both subjective and objective, that point to an auto finance industry that is in full bloom. The amount of non-revolving consumer credit has continued to grow while auto dealers report that obtaining credit for borrowers, especially those with less-than-perfect credit, is becoming easier.
The days of nobody being able to obtain credit appear to be squarely in the rearview mirror.
“The world is upside-down compared to then,” said one auto dealer in an article posted on Bloomberg.com. “Today, somebody with a 500 credit score, I can get approved and in a Malibu,” which starts at $22,110.
Of course, being the paranoid skeptic that I am, and even though the unemployment rate is falling, I wonder if the industry is growing too fast, too soon. Has nobody heeded the supposed lessons learned from the financial crisis?
The auto finance industry is cyclical. The economy is cyclical. If it weren’t for economic cycles, economists would be a lot less busy. It appears as though the industry is on the way up, and we’ll enjoy a few years of strong profits and growth before the worm turns and we’ll find ourselves back in this boat again.
If we’re on the carousel and it keeps moving in circles in the same direction, can the industry grow too fast, too soon? Is an accelerated upswing a good thing for the industry? Does it mean we get to the top faster?
There was a sign on the wall in my ninth grade history classroom that said, “Those who do not learn from history are doomed to repeat it.”
Quick credit for borrowers with dodgy credit histories does not seem like the industry learned its lesson. Why do you think things will be different this time?
There are a growing number of indicators, both subjective and objective, that point to an auto finance industry that is in full bloom. The amount of non-revolving consumer credit has continued to grow while auto dealers report that obtaining credit for borrowers, especially those with less-than-perfect credit, is becoming easier.
The days of nobody being able to obtain credit appear to be squarely in the rearview mirror.
“The world is upside-down compared to then,” said one auto dealer in an article posted on Bloomberg.com. “Today, somebody with a 500 credit score, I can get approved and in a Malibu,” which starts at $22,110.
Of course, being the paranoid skeptic that I am, and even though the unemployment rate is falling, I wonder if the industry is growing too fast, too soon. Has nobody heeded the supposed lessons learned from the financial crisis?
The auto finance industry is cyclical. The economy is cyclical. If it weren’t for economic cycles, economists would be a lot less busy. It appears as though the industry is on the way up, and we’ll enjoy a few years of strong profits and growth before the worm turns and we’ll find ourselves back in this boat again.
If we’re on the carousel and it keeps moving in circles in the same direction, can the industry grow too fast, too soon? Is an accelerated upswing a good thing for the industry? Does it mean we get to the top faster?
There was a sign on the wall in my ninth grade history classroom that said, “Those who do not learn from history are doomed to repeat it.”
Quick credit for borrowers with dodgy credit histories does not seem like the industry learned its lesson. Why do you think things will be different this time?
