The American economy is booming, and more and more drivers are buying SUVs, higher-priced cars and large vehicles as opposed to smaller economy models. This has bolstered the flagging U.S. auto industry for many quarters and helped raise lending volumes to $1.1 trillion since 2016.
This is because the country’s banking industry has pulled back from auto loans thanks to the spike in loan charge-offs that began in Q1 2017. This can be seen in the combined market share of the five industry leaders, including Ally Financial, JPMorgan Chase, Capital One, Wells Fargo and Bank of America, whose footprint has shrunk from 26 percent a year ago to 25 percent currently.
Alternative Lending
One way borrowers circumvent uncertainty in the market is seeking alternative lending options, such as title loans. The key is finding a company that is there for customers where and when they’re needed. According to one title loan lender in Los Angeles, “There are many title loan lenders in Los Angeles but we are the title loan company to help you with the lowest rates and the most money. When you are shopping for the best title loan, convenience is a major factor.” Innovative lenders such as Car Title Loans California provide solutions for users who can’t afford to wait for traditional banks to approve their applications.
Overview Of Loan Portfolios
Among these banks, Ally Financial has grown its auto lending to keep its stance as the largest U.S. auto lenders. However, Capital One has an unusually high auto loan growth rate of 8 percent from Q2 2017 to Q2 2018, compared to a growth of 3 percent for all U.S. auto loans. Meanwhile, Ally achieved an impressive 5.5 percent growth rate.
Capital One is not new to the high-risk, high-return consumer industry since the bank’s expertise is in the card lending. It’s now the nation’s 9th largest bank in the commercial sector.
Whether each of these banks will increase or decrease opportunities for consumers trying to build their credit remains to be seen. In the meantime, it’s likely that alternative financing will continue to find new ways to fill the gap.