---
title: "Tackling Inflation and the Auto Industry Part 1: Protecting Your Loan Portfolio from Car Market Volatility"
description: In today’s auto lending environment, a comprehensive and high-quality portfolio protection program is more important than ever.
---

[State National Blog](https://blog.statenational.com)

# [Tackling Inflation and the Auto Industry Part 1: Protecting Your Loan Portfolio from Car Market Volatility](https://blog.statenational.com/auto-bubble-protecting-your-portfolio-from-car-market-volatility)

 Written by [State National](https://blog.statenational.com/author/state-national) | 9/1/22 4:00 PM

# 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!

 

*To read the second article in this SNC Spotlight series, visit [Part 2, Maintaining Your Competitive Edge.](https://blog.statenational.com/auto-bubble-maintaining-your-competitive-edge)*

[View full post](https://blog.statenational.com/auto-bubble-protecting-your-portfolio-from-car-market-volatility)

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