2015 is shaping up to be a banner year in auto finance, according to Manheim Chief Economist Tom Webb, for the fundamental reason that borrowers are paying their loans.
“Loan portfolios are performing very well in terms of delinquencies,” Webb told Auto Finance News. “And macroeconomic conditions suggest that loan portfolios will continue to perform well.”
He also said that low gas prices make driving cheaper than it has been for some time, easing the strain on consumers’ wallets. Webb noted Wall Street’s current enthusiasm for giving money to lenders, and commented that “though recent securitizations have been looking a little less favorable to lenders, that’s more of a self-regulating mechanism, and it’s a good thing.” Interest rates are also keeping the cost of borrowing low.
“We’re still in a zero interest rate environment,” Webb said, “but even when rates increase, that won’t have a negative effect on retail auto sales.” Webb sees the current market as skewing positive for all parties. “Lenders, borrowers, dealers, investors — it’s just working for everybody right now.”
