LAS VEGAS — Led by Santander Consumer USA, lenders have increased auto loans for customers with no credit score, said Greg Goebel, chief executive and founder of DealerStrong, a dealership training and consulting firm.
Goebel said auto finance is healthy overall and he’s not alarmed about the increase. “It’s a calculated business risk,” he said Wednesday at the F&I Industry Summit.
For the second quarter, SCUSA reported loan and lease originations for all credit tiers were $7.6 billion, up 13.7% from a year ago. The company declined to comment on Goebel’s remarks.
Based on a sample of more than 1.5 million transactions from 700 dealerships, Goebel said SCUSA was No. 1 in what he called “Tier Zero” year-to-date through July, at 19.5% of the category, up from No. 6 and 3.6% share a year ago. Those are first-time borrowers or customers with no active credit history.
Goebel said in his presentation some lenders have told him their share of customers with no credit score is not as high as Goebel estimates, because with enough checking, lenders could sometimes find credit scores for customers that dealerships couldn’t find.
Goebel said seven lenders had more than 5% Tier Zero share, including credit unions as a group at No. 2, followed by Wells Fargo Dealer Services, Credit Acceptance Corp., Capital One, Ally Financial Inc., and Regional Acceptance. A year ago, only five lenders had more than 5% share in the category, he said.
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