Lenders are shouting nothing but positive reviews of their current loan portfolios. Repo men are crying like babies because the bottle is starting to empty out. This is a cycle that has been ongoing since the beginning of finance.
The number of new auto loans is up. The number of on time payments is up. That means that the number of 90 day or older default borrowers is down. These three numbers are always great news to lenders. That means that profit margins are recovering and more loans can be made to an ever expanding variety of credit scores.
Repo men are seeing fewer jobs and lower pay per job for the same reasons. Fewer defaults make it harder to keep a repo business afloat. This is a regular cycle that banks and repo men go through. When new car loans increase, repos go down. Interestingly though, every time loans go up, 12 months later defaults jump and repos increase again. Then the cycle turns and repos increase as new loans go down. The cycle moves like clock work.
Wouldn’t it make sense for lenders to learn that short term profits are not going to sustain them, set a lending criteria, then stick to that criteria instead of adjusting it based on default rates? It would seem to make for a more stable economy that way.