Although delinquencies have shown a slight uptick lately, dealers should appreciate that late payments are still near historic lows.
Delinquencies are “defying gravity,” says Peter Turek, automotive vice president for TransUnion’s financial services business unit.
By that he means delinquencies remain low despite the recent increase in subprime lending. That’s partly because since the recession, households are being more careful about paying their bills on time.
That’s not just of academic interest to dealerships. Turek said low delinquencies are a direct benefit to dealers because low delinquencies encourage lenders to keep credit more easily available.
He said dealers also play a role in keeping delinquencies low by matching borrowers with “appropriate” vehicles, rather than encouraging them to stretch to buy cars they really can’t afford.
So the next time a customer wants to stretch, F&I managers should resist the urge and tell them to stick to their budget. Right?