As auto loan originations near historic highs, lenders are concerned that a significant economic slowdown may result in a spike in loan defaults. There are lessons learned from the mortgage crisis that auto lenders can implement now to help manage regulatory and operational risks while maintaining profitability during a correction.
As loan delinquencies rise, additional regulatory scrutiny is sure to follow. To maintain profitability, auto lenders should consider the lessons from the mortgage industry, including tightening risk and operational frameworks and streamlining operations to prepare for the increase in default volume.
Special thanks to Brian Karp, who contributed to this article.