Longer loan terms, coupled with higher residual value assumptions, will attract borrowers with lower credit scores. That’s the new forecast released this week from Standard & Poor’s, which added that the dynamic will continue to be fueled by consumers who want to replace aging vehicles with newer models. The positive sales momentum should continue for the remainder of 2014 to the tune of 16.5 million new vehicles sold by yearend. S&P Associate Director Nishit Madlani, who worked on the newly released report, told Auto Finance News that enticing financing and loans that exceed vehicle book values are contributing to the positive momentum in the industry. But that momentum won’t pick up in 2015, according to S&P. “We don’t expect a meaningful rise in auto sales in 2015,” Madlani said. “Our base-case estimate for 2015 is for [a SAAR of] 16.7 million, a 1.2% increase year-over-year.” That’s about what GDP is forecasted for 2015.
