Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data

No products in the cart.

Subscribe
  • Capital & Funding
  • Compliance
  • Risk
  • Technology
  • Best Practices
  • Compliance Monitor
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data
BIG Wheels
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

USAA ‘cherry-picking’ assets as auto finance competition heats up 

Lender homes in on used vehicles amid captive subvention 

Amanda HarrisbyAmanda Harris
January 26, 2024
in Risk Management
Reading Time: 5 mins read
0

USAA is strategically financing certain vehicle types as banks and independent auto finance companies face a challenging market driven by captives offering more incentives and lower rates.  

The first half of 2024 will likely prove tough for banks competing with captives, Mark Pregmon, vice president of consumer lending at USAA, told Auto Finance News. USAA provides insurance, auto financing and banking products for military members and their families. 

“Banks are looking at certain makes and models and brands that [captives] aren’t subventing,” he said. “It’s cherry-picking where you can [lend] and where you aren’t going to compete with the captives. … We’re maintaining our market share, but it’s a much smaller pie.”  

“We’re maintaining our market share, but it’s a much smaller pie.” — Mark Pregmon, USAA

Luxury cars and used vehicles, for example, pose opportunities for USAA and banks, Pregmon said.  

“I’ve been in this business for 30-plus years,” he said. “It’s just the cycle. You pull out your playbook, and that’s what you do. That’s where [USAA is] at right now, competing in the used [market], and most banks are there as well.” 

All about rates 

The industry is becoming more of a buyer’s market rather than a seller’s market, defined by better conditions for consumers looking to purchase a car as automakers offer incentives and supply increases, Pregmon said.  

“When you have slowing inventory and slowing sales, you start to see captive subvention, 0% [annual percentage rate] and 1.9% [APR] picking up,” he said, noting that USAA “can’t compete with 0% to 1.9% because our cost of funds is higher than that.”  

USAA’s rates for a 36-month term loan start at 5.89% APR for new cars, 5.99% for used cars and 9.24% for loans on model-year 2016 vehicles or older, according to the lender’s website. USAA reviews rates daily and makes changes weekly, Pregmon said. 

Even with subvented financing, car prices and interest rates are elevated and affordability remains a concern for consumers, Pregmon said, noting that USAA is more competitive from a direct lending standpoint. 

“I can compete when [members] come to me directly as my prices are competitive,” he said. “There’s no dealer participation on our rate and we don’t charge a loan fee.” 

Origination growth 

USAA saw about 15% year-over-year growth in total auto loan production for new and used vehicles in 2023, Pregmon said, without providing specifics. USAA had $18.4 billion in auto outstandings as of June 30, 2023, up 16.4% YoY, according to a Moody’s presale report of the financier’s only auto asset-backed securitization transaction in 2023. 

“This year, [loan growth] is off to a slow start,” Pregmon said. “All bank financing is down year over year and we’re following the same trend.” 

Cash sales across the industry have slowed as rates come down and incentives become more available, he said. USAA also sees a high volume of refinancing in auto. 

“We think [origination volume] will be flat year over year for most banks and us because of the market dynamics,” Pregmon said. “We’ll see some growth in the second half of the year; most lenders will see [growth] as subvention will start to come down, rates will come down and some of the buyers that are on the sidelines will come in to buy.” 

Credit performance steady, terms lengthen 

While USAA did not provide specific delinquency data, Pregmon noted that past-due loan and loss rates are “trending better than pre-COVID.” 

USAA auto loans 30-days past due sat at 0.39% as of June 30, down from 0.46% a year prior and 0.54% as of Dec. 31, 2019, according to the presale. 

USAA’s portfolio is largely shielded from wider macroeconomic pressures and unexpected fluctuations in unemployment because about 70% of its borrowing base receives a paycheck from the government, Pregmon said. By comparison, most banks’ consumer base includes only about 10% to 12% of borrowers who are employed in government jobs, he said. 

Borrowers are “either retired, have a government paycheck coming in, are active duty or on reserve,” Pregmon said. “That makes a difference in our performance.” 

USAA’s average loan term sat at 67 months in 2023, up 2% YoY, while the average loan size fell to $44,000 in December compared to a peak of $47,000 in April 2023, according to USAA data provided to AFN. Even with longer terms, loans typically sit on the books for 27 to 30 months, Pregmon said.  

Meanwhile, USAA is integrating a new loan origination system (LOS) to streamline mobile application and funding processes, he said. Auto lending is in a pilot phase on the new LOS, which the financier has been working for the past 18 months to build in-house, he said. 

“Loan origination is your chance to shine; you want to make sure you have a great experience,” Pregmon said. “Once we deliver, it’s going to be continual improvement.” 

Early-bird registration is now available for the second annual Auto Finance Summit East, May 1-3 in Nashville, Tenn., which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross section of industry players. Early-bird pricing ends March 15. Visit  AutoFinance.Live to learn more. 

Tags: auto originationsauto outstandingscredit underwritingdelinquenciesUSAAused vehicle sales
Previous Post

Capital One originations tumble, delinquencies rise

Next Post

Podcast: ‘Weekly Wrap’ on Vroom, Sonic Automotive closures 

Related Posts

Bruce Newmark hosting a panel with Robert DeJarnette, VP of Risk Management at Consumer Portfolio Services, Charlie King the Chief Technology Officer at Arivo Acceptance, Eduardo Perez the Chief Customer Officer at Tricolor, and Scot Seagrave the Chief Executive Officer at FinBe USA during Auto Finance East Summit 2025 in Nashville, Tenn.
Risk Management

Subprime lenders see opportunity in recession talks  

May 20, 2025
Inside A Flo Electric Vehicle Charger Assembly Facility
Risk Management

Charging installations drop as Trump ramps up attacks on EVs

May 20, 2025
Auto Finance News Editor with Executive Panel
Risk Management

LTV, negative equity concerns escalate with tariffs  

May 19, 2025
Next Post
luxury car dealership

Podcast: ‘Weekly Wrap’ on Vroom, Sonic Automotive closures 

Stay Informed with Our Newsletters

PowerSports Finance

The Roadmap Podcast

ABOUT US

HELP CENTER

ADVERTISE

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Manage Cookie Consent

EXECUTIVES OF THE YEAR

AUTO FINANCE EXCELLENCE AWARDS

MAGAZINE ARCHIVE

INDUSTRY GLOSSARY

facebook linkedin twitter podcast podcast
© 2025 Royal Media
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

THIS WEBSITE USES COOKIES

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “I CONSENT”, you consent to the use of ALL the cookies.

Cookie settingsI CONSENT

Review our Cookie Policies
.
Manage Cookie Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
34f6831605sessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bfsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsrsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONIDsessionThe JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
LS_CSRF_TOKENsessionCloudflare sets this cookie to track users’ activities across multiple websites. It expires once the browser is closed.
LSKey-c$CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
_zcsr_tmpsessionZoho sets this cookie for the login function on the website.
663a60c55dsessionThis cookie is related to Zoho (Customer Service) Chatbox
e188bc05fesessionThis cookie is set in relation to Zoho Campaigns
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
CONSENT2 yearsYouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
__Host-GAPS2 yearsThis cookie allows the website to identify a user and provide enhanced functionality and personalisation.
_dc_gtm_UA-1038974-31 minuteUsed to help identify the visitors by either age, gender, or interests by DoubleClick - Google Tag Manager.
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysA cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface.
YSCsessionYSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt-remote-device-idneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt.innertube::nextIdneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
caf_ipaddrsessionNo description available.
citysessionNo description available.
countrysessionNo description available.
gnt_eidsessionNo description available.
gnt_eu6 hoursNo description
iamcsrsessionZoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
systemsessionNo description available.
traffic_targetsessionNo description available.
Save & Accept
Powered by CookieYes Logo