Podcast: Proposed CFPB rule change teases win for nonbank lenders
Listen as AFN editors break down compliance landscape, powersports values, more
Nonbank auto lenders may soon have a reason to celebrate, following a proposed rule change by the Consumer Financial Protection Bureau to how it defines larger participants of the auto market.
On Aug. 7, the bureau filed an advanced notice of proposed rulemaking to change the definition of a larger participant in auto to nonbank entities with up to 1.1 million aggregate annual originations, an increase from 10,000. This followed the CFPB’s July 14 motion filed with the Office of Management and Budget, which would rule on the request.
The change, if approved, would reduce the number of financiers considered larger participants to five from 63, according to the notice. Traditional lenders and nonbank entities would still be subject to state laws, even if they are no longer under CFPB jurisdiction.
While this unfolds, lenders are also working to seize opportunities in the market.
Auto lenders are continuing to lean into refinance programs on the heels of stabilizing interest rates and consumers’ search for affordability and better loan terms.
Subprime lender Arivo Acceptance Chief Executive Landon Starr told Auto Finance News that the company is ramping up its refinance program with a goal of $60 million in average monthly origination volume.
In fact, TransUnion estimates 18 million consumers, or 23% of borrowers with open auto loans, have interest rates that exceed the average APR in the industry.
Also, average vehicle transaction prices jumped 5.2% year over year in the second quarter to $31,216, according to an Edmunds report published Aug. 12.
In this episode of the “Weekly Wrap,” Auto Finance News Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across second-quarter bank earnings for the week ended Aug. 15.
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Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
everyone, and welcome to the roadmap. From auto finance news since 1996 the nation’s leading newsletter on automotive lending and leasing. It is Monday, August 18, and non truth. Headline. First, I’d like to thank our sponsors for this week’s podcast, the work number by Equifax. Last week, we unpacked the shift in compliance space and how it is impacting lenders, the uptick in refinancing as well as the rising cost of vehicles, especially as affordability concerns persist. Jumping into the compliance the compliance landscape is on the brink of another seismic shift, following a proposal by the CFPB to change its definition of larger participants in the auto market to non bank entities with up to 1.1 million aggregate annual loans. The current threshold is 10,000 so if approved, the change would reduce the number of financiers that are considered larger participants to five from 63 interested listeners could read more about that in my articles titled non bank auto lenders may no longer be governed by the CFPB, as well as my article titled non bank lenders stalled amid shifting compliance landscape in other financier news, Huntington auto finance and Ally financial both issued synthetic auto securitization structured as credit link notes earlier this month. On the traditional securitization front, stellantis, American, Honda finance, Corp and Ford credit are a few of several financiers that issued auto asset backed securitizations at the start of the month. As well. Lenders are also leaning into refi as the market potential is growing. A Revo acceptance is the latest lender to increase its refinance efforts for more updates on vehicle prices and power sports, I’ll turn it over to Aiden.Aidan Bush 14:50:20 Thank you so much truth to start, I think one of the more poignant data pieces I really wanted to look at came from an Edmonds report last week. They found that prices of three year old used vehicles, which the report will sometimes referred to as near New vehicles, climbed a little bit over 5% year over year, to $31,216 in the second quarter. That 31,000 figure is really important there, because it is just shy of the all time quarter two peak of $31,628 set in 2022 new vehicle prices have also jumped alongside those used vehicles. Prices reaching around a little over, excuse me, a little bit over 44,000 in quarter two, compared to around 40,000 in quarter to 2022 which is when that all time peak was set. While those prices have while those prices have risen, consumers haven’t quite caught up leaving them to seek older used vehicles and longer term loans. In terms of inventory, we also saw year over year and month over month declines, according to a Cox automotive report, while some dealers are hoarding pre tariff inventory intentionally to kind of get ahead of some of those tariff induced price hikes they’re expecting, others are seeing new vehicle inventory drop for really two factors. Consumers are buying new EVs before the elimination of that federal tax credit, and then new vehicle incentives were especially aggressive in July, with Cox automotive reporting that those incentives rose to 7.3% of sort of the average transaction price of a vehicle in July, which that report notes, is the highest that percentage has been this year so far. Finally, kind of in the RV space, towable values dropped slightly year over year, but rose month over month in June, according to the most recent black book report, wholesale motorhome volumes also fell year over year and month over month, but that really signalized sort of a normalization of the market, because, and this data is for June, as I mentioned in May, a few expensive Class A motor homes went to auction, and the motorhome market is small enough that even a few of those can skew values. If you’re interested in hearing a little bit more about the state of the power sports market. It is not too late to register for power sports finance summit 2025 and among sort of the many panels there, there will include a fireside chat from John Vestal, who is the Executive Vice President of power sports lender octane. So that’s all for me, but I will turn it back over to Truth for some additional takeaways from last week. Truth Headlam 14:52:54 Thank you, Aiden. Some other things that happened last week was that it was reported that US retail sales rose in July, while underlying us, inflation also accelerated. However, the cost of tariff, tariff exposed goods didn’t rise as much as some anti. Participated. Also several financiers reported q2 earnings last week, Rumble lawns, F and I revenue dropped 8% in the second quarter, while their new power sport unit sales also fell about 11% and their pre owned power sports sales jumped about 10% as well. Next scare capitals floor plan portfolio also rose in both the salvage vehicle and heavy duty truck departments, and that increase was about 51% on $1 basis since the launch of the program IN THE BEGINNING OF 2024 through the first half of 2025 West Lake flooring saw its service portfolio jump 20% year over year On a unit floor basis. This was in line with growth seen by other floor plan financiers. Thanks for joining us on the roadmap, and be sure to follow us on x and LinkedIn. Registration is also open for our upcoming auto finance Summit, 2025 and power sports finance Summit, 2025 in the fall, as always, we will see you online at auto finance news.net. See you next time and again. Thank you to our sponsor, Equifax, lenders who leverage income and employment verifications through Equifax is the work number see a 48% higher likelihood of loans closing. You.
