After several years of stagnation, auto loans are finally seeing an uptick. US Banker reported [See US Banker Article] that new U.S. car sales jumped 17 percent in January 2011 compared with the same month a year earlier. The average amount financed also rose over $200, to $25,789, for new cars, and over $700, to $16,992, for used ones.
However, as the number of loans increases, so does the number of charge-offs. And unfortunately, the average auto loan charge-off is nearly $7,000, putting lenders at increased risk of loss as their portfolios grow.
A collateral protection insurance (CPI) program is your best safeguard against auto loan loss. It can pay for physical damage or a total loss of uninsured collateral, and provide ancillary coverages such as repossession and skip. CPI programs can also be structured to pay you an administrative reimbursement (or a commission to a licensed agency) to offset the costs of administering the program. And, today's CPI programs are easy to implement as well as administer, freeing you to focus on servicing your growing book of auto loans.
CPI is a smart choice in any auto lending market by providing valuable protection against loss. In a growing, competitive market, CPI can also help you gain competitive advantage by enabling you to manage your portfolio at peak efficiency.