Jeff Chandler

September 7, 2018

Which way did he go?

Growing up, Saturday mornings were always special to me. A time loved by most children, Saturday morning cartoons were are a favorite pastime. One of my favorites was Looney Tunes, particularly Bugs Bunny (even though my overall favorite is his arch nemesis, Yosemite Sam). I remember a certain episode where Bugs was being sniffed out by a hunting dog. At one point, Bugs dressed in a hunting dog outfit when the dog comes up and poses the question (I can still hear the exact way the voice sounded), “Which way did he go, George? Which way did he go?” He was completely confused and had no idea where the bunny had gone. Have you ever felt that way when it comes to your auto lending?

You are not alone.

You think everything is going fine, but all of a sudden delinquency, charge-offs and repos all spike. Next thing you know your head is spinning and you are asking yourself what went wrong? Where did I lose track? Several lenders in the subprime space have folded up shop as losses start to mount. New data shows that more consumers are late on subprime auto loans than at any point since 1996. For the lenders still in business they are starting to pull back and tighten up underwriting policies.

There is a better path to take.

I don’t necessarily agree with this “light switch” method. Indirect lending is an extremely competitive market and the last thing you want to do is confuse your primary customer, the car dealership. Something that is of utmost priority for them is knowing which lenders they can place a deal with. When you start a roller coaster trend around your decisioning process there is no consistency and you can lose credibility. This is why it is so important to either build an in-house scoring model or utilize one from a trusted source.

Descriptive and Predictive

As a lender, you are always looking for a few key items to drive your numbers such as:

  • Growing your customer base
  • Growing your number of loans
  • Avoiding an increase in losses

So how do you attain these goals? Actionable insight into your customer through data and analytics. It comes down to variables or attributes. Two camps of those are descriptive and predictive. Descriptive Analytics, which use data aggregation and data mining to provide insight into the past and answer: “What has happened?” Predictive Analytics, which use statistical models and forecast techniques to understand the future and answer: “What could happen?”

Trailblazing to Credit ExpansionDownload this infographic to see how you can gain a leg up on your competition and maintain relevancy while expanding your marketshare.

I always enjoy hearing from colleagues in the industry and see what you are experiencing and putting in place. Please feel free to comment on here or reach out to me at .