iLending Industry Insights – State of Auto/Car Loan Refinance

The Latest Industry Overview from the Top Car Loan Refinance Company

Englewood, Colorado, UNITED STATES

Englewood CO, Feb. 15, 2023 (GLOBE NEWSWIRE) -- iLending, a national leader in automotive refinancing, is pleased to announce the third installment of our report on the State of the Car Loan Refinance Industry. Published quarterly, these insights are based on our internal data coupled with industry and consumer information. The intent of the publication is to provide meaningful insight for those interested in the auto loan refinance market, as well as for consumers that may be considering refinancing their existing auto. 

Since our last Insights publication in November, we have seen improvement in new car inventories and stabilized or reduced pricing for the Used Car marketplace.  Inflation and historically high-interest rates persist, continuing to put pressure on the consumer and the auto industry overall.  At the end of 2022, there was a tapering of appetite from lenders seeking to add auto loans to their balance sheet despite consumer demand continuing to be strong. 

“We have seen a contraction in lending sources based on the tough economic realities of consumers exhausting their savings, rising credit card and consumer debt balances, and interest rates spiking,” commented iLending CEO Tom Holgate. “It appears we will see a floor to the current lending environment in the first half of 2023 and expect growth beginning in the second half of the year as consumers seek relief from the burden of inflated interest rates that started back in 2022.”

Used Car Prices

The auto industry saw a large decline or correction in used car prices in 2022.  Entering 2023, we are seeing a taming of that trend, at least early on.  Wholesale used-vehicle prices (on a mix-mileage, and seasonally adjusted basis) increased 1.5% from December in the first 15 days of January. The end-of-month Manheim Used Vehicle Value Index rose to 224.8, which was down 12.7% from the full month of January 2022 and up 2.5% from December.

New Car Inventories

According to MarketWatch, new car inventories climbed through December, nearing what used to be considered “normal” levels prior to the COVID pandemic and subsequent supply chain disruptions.  While inventories are beginning to recover, buyers have not been running to car lots to buy, thus sales have not increased at the same pace.  We are seeing increases in supply of 37% but only sales increases of 2% currently.  Experts expect we will see the return of discounts or incentives on new vehicles if this trend continues. As an example, Audi Financial Services is now offering 2.99% financing for 60 months on select units for “well-qualified buyers” and only available on very select vehicles.  Access to such programs is often difficult, but for those in a position to take advantage, it is a good deal given the current rate environment.

Subprime Lending

In 2022, the Federal Reserve significantly raised interest rates at a breakneck speed in hopes of reigning in the decades-high inflation that had taken hold. More moderate interest rate hikes are anticipated to continue in early 2023 and should taper off as inflation slows. Additionally, subprime loan performance is showing signs of weakness.  According to Kroll Bond Rating Service, both 60+ day and 90+ day delinquency rates are higher at the end of 2022 than they have been in at least 5 years.

Federal Reserve Decisions and the Economy

Based on research from Edmunds and reported by, as shortages of computer chips and other parts ease, automakers are producing more vehicles.  Rising loan rates and lower used vehicle trade-in values have made it more challenging for consumers to realize savings on monthly payments by refinancing.  “With the interest that you’re going to pay, those payments might not look too dissimilar to what they were a few months ago,” said Ivan Drury, director of insights for  “It’s like every single time we hear one piece of good news, it’s being offset by pieces of bad news.” Since March 2022, average new car loan rates are up from 4.5 percent to 6.9 percent, according to Edmunds data.  Used vehicles are up from 2.5 percent to 10.6 percent. Monthly payments now average $728 for new vehicles and $546 for used vehicles.

In addition, the outsized jobs report of more than 517,000 new jobs is a mixed indicator of the health of the economy.  These jobs are largely in the service and hospitality industries where the demand has been high for the past couple of years.  It seems only now we are seeing a real improvement in the labor participation rate after months of historically low levels.  This may be a leading indicator that consumers are substantially more stressed, and that interest rates and inflation will come down sooner than some market observers are predicting. 



Based on the factors above, iLending believes the opportunity for consumers to qualify for and save money by refinancing their existing auto loans is: Weaker than it has been in years due to the high interest rate environment and shrinking lending capacity. We expect this will improve as 2023 progresses and the Federal Reserve slows and stops the interest rate increases.

iLending still sees opportunity with subprime and near-prime borrowers where the ability to save money is needed now more than ever due to rising costs of housing, groceries, fuel, and household goods.  The opportunity includes an option for consumers to skip a payment, sometimes up to 90 days. Funding those loans will be more challenging in the first half of 2023 and we expect to see that difficulty easing in the second half of the year.


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