In the past 10 years, customer finances have seen a very dramatic shift. In 2024, the combined balance for all auto loans and leases has reached $1.7 trillion. This marks a 2.3% increase over last year, and a 15% increase from 2014. In general, auto loans and leases make up 35.9% of all non-mortgage consumer debt, which is a 14.7% increase since 2014. With the high frequency of these loan and lease agreements, consumer delinquencies are bound to happen, an emerging auto industry trend.
Auto delinquencies are defined as an auto loan or leasing agreement in which a payment is more than 60 days past due. These delinquencies are not equal, though. Younger generations, namely Millennials and Gen Z, have a much higher percentage of auto loan delinquency than older generations, such as Baby Boomers. This issue is compounded and worsens when synthetic identities (Syn ID’s) are added to the equation. Loans and leases with a Syn ID have a delinquency rate that is 3 to 5 times higher than the average delinquency rate. So, how can you protect against this?
Companies like Equifax aim to help you protect yourself against any Syn ID’s. They offer Know Your Customer (KYC) technology to prevent fraud losses. This technology provides you with real-time insights about your customers during the car shopping process. To make sure you know who you’re doing business with, it’s vital to use Equifax in your dealership.
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