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.
All Posts

Continued Pandemic Effects on Auto Lending: Portfolio Protection Is More Important Than Ever

Changes originally set into motion by COVID-19 have had lasting effects on borrowing patterns in the automotive industry. State National Executive Vice President Trace Ledbetter discusses what financial institutions can do to proactively protect their portfolio and borrowers.

Experian is a global leader in consumer and business credit reporting services, with decades of experience gathering, analyzing, and processing financial data for consumer and business use. One of the firm’s regular outputs is the “State of the Auto Finance Market,” an automotive industry finance market report released quarterly. In the second quarter of 2020, this report included the impacts of COVID-19 on the auto purchase and lending marketplace for the first time.

The insights shared within this report are interesting, to say the least, and shine a light on why a strong, reliable portfolio protection program will be more important than ever for automotive lenders in the months and years to come.

Coronavirus and Cars: Ups and Downs in 2020 So Far

The COVID-19 pandemic has had wide ripples of impact across the globe and has touched every industry and all aspects of the American economy. As the U.S. and other world economies return slowly to something resembling normalcy, there has been improvement in unemployment and consumer confidence; however, many challenges still remain and will continue to affect consumer behavior years into the future.

As a leading economic indicator, the automotive industry is one reflection of those changes and challenges. Unsurprisingly, in the late first quarter and early second quarter of 2020, the auto industry saw a dramatic decline in sales. Though sales have rebounded significantly in the third quarter, the overall industry is expected to be down year-over-year by 5%. Consumer buying patterns have also shifted, with new vehicle sales down 10.6%, while used vehicles are experiencing a surge in sales.

Higher Balances, Longer Loan Terms: Record high new loan amounts drive increased payments

Automotive loan patterns have changed as well. The average new vehicle loan amount is currently $36,072, which is roughly $4,000 higher than last year, and the average payment on these loans is about $20 higher per month. Used vehicle trends are the same, but to a lesser degree — the average used vehicle loan amount is currently $20,916, roughly $800 higher than last year, and the average payment on these loans is about $5 higher per month.

These changes become even more interesting when looking at the loan term and borrower credit composition. Over the past year, the average new vehicle loan term has increased to 71.54 months, while used vehicles averaged a term of 65.3 months. Non-prime, subprime, and deep subprime borrowers comprised 32.44% of total new vehicle borrowers and 51.27% of total used vehicle borrowers.

All of these changes to automotive borrowing patterns mean that auto lenders will have to be diligent about managing their organizational risk. An important part of that vigilance will include having strong, reliable programs in place to protect their businesses against uninsured borrowers as well as auto loan delinquencies and charge-offs.

At State National we focus our full attention on creating the best of these programs, and as a company we invest our time and resources in continual upgrades and enhancements. This enables us to offer robust, unique portfolio protection solutions that provides financial institutions what they value most in a partner.

In fact, we tried counting the many features and benefits that lead smart financial institutions to choose State National for insurance tracking and collateral protection insurance — and made it to 101 reasons before we stopped counting!

  1. The most advanced technology and ease of use
  2. The most detailed and comprehensive insurance tracking
  3. Faster and more efficient claims payment processes
  4. The most robust, easy-to-access program management and reporting
  5. Greater transparency and immediate visibility to borrower interactions
  6. Proactive, non-disruptive borrower notifications for minimal borrower friction
  7. Unparalleled service with responsive communication and prompt resolution

To see the rest of the 101 advantages you should expect from your institution’s portfolio protection partner, download “Portfolio Protection Program Essentials: The Ultimate Checklist” today.

At State National we focus our full attention creating the best of these programs, and as a company we invest our time and resources in continual upgrades and enhancements. This enables us to offer robust, unique portfolio protection solutions that provide financial institutions what they value most in a partner.

Trace Ledbetter
Trace Ledbetter
Trace Ledbetter is executive vice president at State National Companies, Bedford, Texas, where he directs and oversees delivery of all services and products for lender services, including customer relationship management, underwriting and claims.

Related Posts

Warning Lights on the Financial Dashboard: Navigating Risk in Auto Finance

In the financial world, uncertainty often casts a shadow of doubt over the future. As economic experts and analysts scrutinize current data and trends, it seems likely that the path ahead is likely to be one with its share of obstacles.

Roadblocks and Solutions: Understanding Auto Repossession Delays

From Moratoriums to Market Fluctuations to Disappearing Agents — a Lender’s Conundrum Auto repossession, the process of reclaiming a vehicle from a borrower who has defaulted on their loan payments, has become a more challenging and time-consuming process in the current environment than ever before. Why?

How Much Money Can We Save You? 4 Questions to Find Out

Protecting your auto loan portfolio doesn’t need to cost your credit union, bank, or finance company as much money, time, and resources as it does today. With seamless implementation and a multitude of unique advantages in our service model, State National saves lenders money. Just how much? Let’s find out! 1. How many auto loans do you have in your portfolio and how much time per week does your staff spend on managing collateral protection in your current portfolio? Our program is built to free up your staff’s capacity and provide you with FTE savings. Our exclusive lender platform, InsurTrak, has every tool you need, including: Real-time data on borrower insurance status, notifications sent, account history, insurance documentation, and all borrower interactions Instant, on-demand access to all recorded borrower phone calls. Fast, automated payment change and refund information On-demand management reports and customized, transparent reporting of all aspects of your program Created in-house and customized for CPI programs specifically, InsurTrak is the industry powerhouse in tracking, claims filing, reporting, and program management, all in one user-friendly, easy-to-use platform. “Efficient? I’d estimate State National’s system saved us 6 figures and 1 FTE!” ~ Steve McIntire, VP of Administration and General Counsel, SELCO Community Credit Union 2. What is your 12-month claim benefit? State National returns, on average, 20% more in claim dollars than other providers. Because we are the carrier, underwriter, and claims payer, there is no middleman and almost no paperwork required. Many claims are processed in 10 seconds with AI and those that need further review are paid within 5 days of their submission date. That’s 5 days start to finish. Additionally, filing a claims payment has never been easier for your team. Our claims form comes pre-populated with data from InsurTrak. You don’t even have to decide which claim type you want to file — we automatically process each claim for ALL available coverages, regularly returning more dollars to you. Did I mention we have broader coverages that provide more value to the financial institution? Not only that, but we offer a borrower-centric coverage that allows your borrower to file a claim even if they are uninsured! “State National has saved us a truly significant amount of money.” ~ John Grimes, AVP of Collections, MAX Credit Union 3. If you have a CPI provider, what is your current CPI penetration? We reduce CPI penetration by 20-30% because of our proprietary AI tracking software, proactive verification methods, and our email and text programs. Our Web-Based Robotic Automated Processing (WRAP) software automatically extracts insurance information from insurer websites and updates it in InsurTrak — without any human effort or intervention. WRAP uses AI and machine learning to proactively search for new policy information from seven different carriers, including the country’s top five auto insurers, before ever notifying a borrower. Only if we can’t verify insurance through WRAP or our other proactive and behind-the-scenes verification methods do we reach out to the borrower via multiple channels, including email and text. Borrowers can easily respond through the channel they prefer — email, phone, or our borrower-facing MyLoanInsurance.com portal. They can even send an image of their insurance information by text! All this combines to create a more seamless, frictionless experience that results in lower penetration rates and greater client and borrower satisfaction. “Even though State National provides the insurance, I know their goal in the end is to NOT have forced placements. It's an active partnership that hits from all angles.” ~ Lora Stebleton, Vice President of Payments & Customer Service, Gate City Bank 4. What core processor do you use? InsurTrak is engineered to work seamlessly with all major core processors. Because innovation is our mindset, we have multiple automation options available to accommodate your systems and processes. When designing InsurTrak, we kept software compatibility a top priority. This means seamless real-time premium adds, refunds (including partial refunds), and payment syncing. With minimal steps to set up, you can link Symitar Episys, Temenos, and AKUVO directly to InsurTrak. For those who use Symitar Episys, State National has set up two-click direct connectivity, allowing all InsurTrak data to be accessed through your Episys system. Temenos and AKUVO users can easily connect to InsurTrak within their frameworks using the State National connector. “I just don’t think anybody else out there can compete with what State National has as far as the product, the technology and innovation, and how many things are automated.” ~ Corey Rupp, Chief Retail Officer, Affinity Plus Credit Union Switch Without a Glitch Once you decide to partner with State National, our dedicated Program Implementation Team is there to guide you all along the way and answer any questions you may have during any step as you onboard. “It was the best implementation I have done with any company. It was flawless.” ~ Joy Dominguez-Mota, Department Manager, Nationwide Acceptance Want to determine the actual savings your financial institution can achieve with these advantages? Let us know your answers to these questions and see how you can take advantage of these and other exclusive benefits. Sign up for an in-depth, customized consultation and program review today to see how much time and money we can save you!