Ally Financial Inc., one of the largest U.S. auto lenders, is navigating the coronavirus pandemic in a much tighter ship than during the 2008 financial crisis.
A perfect storm of rising unemployment, uncertainty over consumer credit metrics and spiking infection rates in many areas of the country point to rougher waters ahead.
Jenn LaClair, CFO at Ally, spoke with Staff Reporter Jackie Charniga about the current state of the company's portfolio, how automotive loans and leases are performing during the pandemic and her No. 1 fraud concern. Here are edited excerpts.
Q: How many auto accounts at Ally are in forbearance status right now (July 17)?
A: It's 1.3 million accounts, which reflects approximately 30 percent of our retail auto accounts. Thirty percent of those were scheduled to expire this quarter. We have another 70 percent scheduled to expire next quarter. The next couple of quarters are going to be really telling just in terms of the payment health around our deferral population.
If you look just within the current quarter, you can see the consumers benefiting from the forbearance programs as well as from stimulus. And so you see, [net charge-offs, or debt unlikely to be repaid], even in this unprecedented stress of unemployment in the teens, you see net charge-offs coming down. The consumer is benefiting from the stimulus relief, unemployment benefit expansion and forbearance. That being said, what we've seen from a payment perspective overall has been pretty healthy with the consumers ... about a quarter of them are continuing to pay.
Q: Do auto loans in forbearance status accumulate interest?
A: Yes. If I took a 120-day deferral, I would continue to accrue interest, and I'll tack on 120 days to the length of my vehicle contract.