Still, some growth opportunities for lenders don’t involve dealers at all. Landau predicts auto loan refinancing will help banks in particular expand their portfolios in 2019. Through refinancing, lenders don’t have to incorporate the dealer into the transaction, which means they don’t need a field team to support those relationships as they target customers directly.
Refinancing also allows banks to avoid directly competing with captive finance companies and helps them gain additional business through serving customers hoping to get a better rate.
Another major growth engine for 2019 and subsequent years will be used-vehicle financing, Landau said.
Industry analysts believe the glut of off-lease and off-fleet vehicles from record sales in 2016 will peak this year, which means lenders hoping to capitalize on the returning wave will have to do so in the coming quarters. In particular, returning sedans will help satisfy the demand for small, affordable vehicles consumers are having a hard time finding on the new-vehicle side, and lenders would do well to involve themselves in those opportunities as they arise.
While credit unions have harnessed their strategies toward refinancing and used-vehicle originations, other lenders should aim to catch up this year, Landau said.