SNC Spotlight

Insurance can be complex. Turn to our blog for up-to-date, relevant content to help you make the best decisions for your financial institution. With expert knowledge from seasoned industry professionals, we simplify insurance topics so you can get back to business.
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Tackling Inflation and the Auto Industry Part 1: Protecting Your Loan Portfolio from Car Market Volatility

In today’s auto lending environment, a comprehensive and high-quality portfolio protection program is more important than ever — including partnering with a provider that will pay the full loan balance instead of actual cash value (ACV).

 

Protecting Your Auto Loan Portfolio from Car Market Volatility

 

Consumers Are Facing Financial Stress and Uncertainty

Many Americans increasingly financially strapped, as well as uncertain what their financial future will bring — and borrowers aren't the only ones at risk.

Future market volatility has the ability to impact a vehicle’s perceived value between now and when a member pays off their loan. Today’s larger loan balances and longer loan terms leave them at risk of being upside down, with a vehicle worth considerably less than what they still owe.

As a result, this also increases risk for lenders in their loan portfolios as they are providing loans to their members for vehicles with a hyperinflated value. If the collateral sustains damage or loss when a borrower is uninsured or underinsured, the financial institution can also find itself “upside down,” with the claims amount they receive insufficient to cover its exposure.

 

The Good News

The solution? When you partner in a high-quality collateral protection program with State National, you can receive Waiver of Actual Cash Value (ACV) coverage — which means State National will pay the value of the entire loan amount remaining and not just a car’s value at the time of a claim.

In “normal” times, Waiver of ACV coverage is a valuable tool for decreasing risk in a lender’s portfolio. In times like these, when lenders are already being double-squeezed by low net interest margins and increases in bad debt, it’s a vital part of a successful risk mitigation strategy.

For more information on how this valuable solution can help you manage risk in your auto loan portfolio, contact one of our specialists today!

Contact Us!

 

To read the second article in this SNC Spotlight series, visit Part 2, Maintaining Your Competitive Edge.

State National
State National
As the leading insurance carrier in the United States specializing in CPI, State National offers single-source solutions for credit unions, banks, finance companies, and specialty lenders of all sizes. Our services are cost-effective and tailor-made to safeguard assets against uninsured collateral losses.

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