As many lenders feared, the ramifications of the subprime mortgage crisis for cash-strapped homeowners have pushed the credit crunch beyond mortgages. Delinquency rates are rising for consumer loans, including automotive finance. Auto loans are secured by collateral, the vehicle financed, but in reality a lender does not want the vehicle but simply wants to be repaid as scheduled. For financial institutions seeking new ways to stem the tide of auto loan delinquencies, this Research Note suggests ways to rethink delinquency, default, and collections practices. The Note provides a number of insights to assist lenders in meeting the challenge of keeping borrowers in their vehicles.
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