When 2020 started, we were not aware that phrases like “new normal” and “unprecedented” would become the vernacular of business professionals across America. After a short while, it got to the point where those phrases would be muttered with a semblance of sarcasm at the start of each virtual meeting or phone call. Towards the end of the year, I could feel a sense of hope that 2021 would be a new year, where things would end up going back to the “old normal” in some capacity.
In late 2019, community lenders had no idea what kind of challenges they would face during the upcoming year. While many lenders set their budgets for upcoming years in the fourth quarter, it was impossible to predict the current environment that we would be in today. As the novel coronavirus swept through the news and the United States, financial institutions took (and continue to take) a vital role in maintaining the wellbeing of Americans.
Nearly every lender has been written up during an examination of their collateral protection. This leads lenders to hire a third-party vendor to track and force place their insurance in order to reduce their workload, as well as their compliance risks. While using a third-party vendor can be considered a transfer of risk, lenders often are frustrated with the amount of work that their staff still has.
In today’s hyper-competitive auto loan market, lenders face the challenge of which products to provide to their borrowers in order to stand out; one of those products is an auto warranty. As automobile prices increase, so do the cost of repairs. With high automobile prices and high repair costs, even one major repair can cost more than the price of a borrower’s extended warranty.
In a day and age where information is nearly immediate, lenders face the challenge of working to set themselves apart from their competition. Indirect lending is a particularly difficult arena to set yourself apart in, especially in a world where rates are aggressively low, and margins are slim. Instead of competing in a race to the bottom in APR, why not set yourself apart with innovative protections for your borrowers? Our newest product called Vehicle Return Plan or VRP from Unitas Financial Servicesallows auto lenders to offer a year of complimentary coverage to their borrowers with optional extra coverages.