Big Wheels: Banks tighten standards as demand for auto loans wanes

Banks tightened lending standards for auto loans in the first quarter of 2024 while demand for consumer and car loans weakened. The net percentage of banks that tightened credit standards was 9.8% in Q2 compared with 6.3% in Q1 and 27.5% in Q2 2023, according to the latest data from the Federal Reserve ’s April Senior Loan Officer Opinion Survey on Bank Lending Practices , published on May 6. The data points measure trends from the prior quarter. The net percentage of banks reporting stronger demand for auto loans landed at -26% in Q2 compared with -16.7% in Q1 and -26.5% in Q2 2023. The survey includes responses from 66 commercial banks submitted by April 8. [caption id="attachment_58341555" align="alignnone" width="604"] Big Wheels [/caption] A “significant net share” of banks reported tightened credit card standards , while a “modest net share” of banks reported tightening standards for auto loans. Still, most banks reported making few to no changes regarding credit in the first quarter. Of 46 respondents, 31.2% of banks reported tightened spreads for auto loan rates with the rest reporting unchanged spreads, according to the survey. Meanwhile, 9.4% of banks increased minimum down payments and the rest reported no change. Of bank respondents, 3.1% tightened the minimum credit scores required to obtain an auto loan, with the rest reporting no change. A “significant net share of banks reported weaker demand for auto loans,” according to the survey. . Of 47 respondents, 20.6% reported weaker demand for auto loans, while 73.5% reported about the same demand and 5.9% reported greater demand. Banks have lost market share in auto for 10 years in a row, according to a recent Auto Finance News analysis of auto loan outstandings . Banks’ share of loan and lease outstandings dropped to 41.2% in 2023, continuing its fall from a high of 52% in 2011. However, banks were the leader by lender- type in used-vehicle loans in the first quarter, their share grew 79 basis points year over year to 28.4%. During the Q1 earnings season, banks offered a mixed approach toward s auto, but several major banks and regional banks pulled back . O riginations ticked down at several banks: Bank of America saw originations down by 6% as Chase Auto and Wells Fargo also had declines. The Big Wheels Rankings are now available as a component of the relaunched Big Wheels Data Service, which includes an array of datasets on underwriting, volume, pricing and capital. . The rankings tabulate the Top 100 auto lenders and lessors by originations and outstandings. . See BigWheelsData for details.

Big Wheels: Banks tighten standards as demand for auto loans wanes

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