There are at least three key indicators that show competition among lenders for auto finance business is heating up -- all of which are good news for dealerships trying to get customers financed.
1. Lower interest rates. Interest rates on auto loans were down slightly in the second quarter from a year ago, Experian Automotive reports. The average rate on a new-vehicle loan was down 21 basis points to 4.77 percent for the second quarter; the rate for the average used-vehicle loan was down 22 basis points to 8.8 percent. Those averages include many 0 percent deals, which help drive traffic.
2. A battle for market share. Smaller lenders are challenging the biggest auto lenders, as more lenders come back into the market. The top 20 new-vehicle lenders accounted for 77.3 percent of the U.S. market in the second quarter, down from 80.1 percent a year earlier. That means regional banks are getting back into the game -- a good sign for dealerships in smaller markets.
3. More auto loans overall. Experian Automotive reports the total of U.S. auto loans outstanding was up by $11.1 billion in the second quarter versus the year-ago quarter, to a total of $645.9 billion.
Thinking back to 2009, most auto lenders and the dealers they do business with probably like the changes.