Unknown Speaker 17:17:34
Hello everyone, and welcome to the road map from auto finance news since 1996 the nation's leading newsletter on automotive lending and leasing. It is Monday, April 6. I am Johnnie Martinez, the second deputy editor of auto finance news last week, the balance between auto lender growth ambitions in the face of rising credit and affordability pressures took center stage in the auto industry. One hand, there's still a lot of money flowing into the space, with Bloomberg reporting signaling that US banks have ramped up lending to private credit firms to about $1.4 trillion

Unknown Speaker 17:18:11
that's massive growth, and it shows there's still strong appetite for yield. Still, analysts are starting to get a little uneasy with Moody's indicating that the sector's ability to outpace the market raises red flags when something grows that fast, questions come up about underwriting quality and concentration risk at the same time, funding markets are holding up pretty well. Auto ABS spreads have widened a bit since the start of the Iran war, but not dramatically, and we'll touch on that more later.

Unknown Speaker 17:18:39
On the policy front, the Trump administration tweaked its metal tariffs this week or last week. The 50% tariffs are still in place for a lot of products, but there's now some relief for goods that don't use much metal. It's really about simplifying the system and easing pressures on certain manufacturers. This comes as things are tightening on the consumer side. Vehicle sales dropped in March and the first quarter, part of that is because last year, people rushed to buy ahead of the tariffs sale. Affordability is the real issue with higher vehicle prices, rising fuel costs and general economic pressure all weighing on demand. With our other editors having more insight into all of these,

Unknown Speaker 17:19:26
what we're seeing is a pretty clear split. The capital markets are still operating strongly, but overall risk is rising and consumers are feeling squeezed with the tariffs and Iran war continuation only exacerbating the consumer concerns. As more macro, economic and geopolitical concerns arise, we'll continue to update you on the auto finance implications, so stay tuned for more on how auto lenders are doing amid the current credit conditions, as well as changes at the Consumer Financial Protection Bureau. I'll turn it over to our editor. Amanda,

Unknown Speaker 17:20:00
great. Thank you, Johnnie, yes. So to start with, definitely looking at the CFPB. The CFPB put in some additional disclosures, basically to try to cut down on the number of consumer complaints that are filed around credit disputes. So if they want to get trade lines off their credit, a practice that is known as credit washing, which is fraudulent, if you are claiming identity theft or you are a victim of something that would get your trade lines off your credit that are negative, but they are not legitimate claims, that is a form of fraud typically called credit washing, and that is being is driving up complaint volume very significantly, and part of it is because AI is now making it very easy for people to create, essentially, templates of these credit dispute complaints and flood the CFPB system with, you know, hundreds, 1000s of complaints related to credit trade lines, negative trade lines, trying to get their credit scores up and get those off, trying to be victims of, you know, vanity theft, things like that. But they really aren't. So they saw that kind of happening. And so now there are screens in place. When you go to submit a complaint, you have to attest that you first went to the actual credit reporting agency and submitted that complaint. It actually has a formal dispute process under law that gives the entity 30 days, could be up to 45 days, depending on you know, the situation, to investigate, figure out that that's legit or not, and then respond. So if you're going straight to the CFPB, you're kind of cutting out that legal process and then basically cutting out the time that a business should have under the law to investigate those properly. So now there are screens there reminding consumers they must do that, you now have to attest before you submit a complaint. It's really too early to tell if that's actually going to cut down the complaint volume related to those disputes, but at least there is some kind of process in place to hopefully catch some of the bots that are filling those in. So we'll continue to follow that and see if that has any bearing on the number of complaints down the road. And with that, I'll turn it over back to Johnnie,

Unknown Speaker 17:22:11
fantastic. Thank you for the update on the things going on at the CFPB. For more information on capital markets, turn it over to our Senior Associate Editor, truth.

Unknown Speaker 17:22:20
Thanks, Johnnie. So last week, we had a bit of a lighter week with the.

Unknown Speaker 17:22:26
Holiday. But that does not mean that we did not have news. We had an exclusive with Riz lending. So Riz lending is a specialty auto finance firm, and they closed a $300 million private warehouse facility with an unnamed bank. That deal was closed on April 1, and the funds from the deal will be used to fund both originations and grow dealer partnerships, while risk lending did not give an exact number, they did say that origination side at approximately 50 million. And with this new warehouse line, they are looking to 4x that amount in 2026 alone, meaning that they're looking to increase origination to about 200 million, give or take. So that's very interesting and exciting to hear.

Unknown Speaker 17:23:29
Additionally, when it comes to their dealer partnerships, again, they did not specify exactly how many dealer partnerships they had, but they did emphasize that they are currently in about 40% of the states here in the United States, and they are looking to expand to all 50 states. If you are interested in reading more about this very interesting development in risk lending capital markets history, feel free to check out my story from April 2. It's titled. It's titled exclusive risk lending closes 300 million warehouse facility comma plans to increase originations to 200 million in 2026 back to you, Johnnie. Thank you so much for that update on what is happening in the capital markets and ABS space. Lastly, for more on affordability pressures and how they are changing the auto finance market. I'll turn it over to our Associate Editor, Aiden, thank you, Johnnie. So I really spent most of last week speaking with subprime auto lenders and buy here, pay here retailers, about the ways that affordability pressures were both impacting consumers and dealerships. So to start on the consumer side, what really seen is that as vehicle prices continue to increase, consumers are putting smaller amounts toward their down payment to save money where they can. So the average amount financed on a used vehicle, for example, rose a little bit over 3% year over year to around 30,000 just shy of $30,000 according to Edmunds and for buy here, pay here, dealers, Soul savers, auto sales, that has really created this cycle where the sort of bottom run of consumers are priced out of vehicles, resulting in less volume, requiring that dealership to increase their gross margin prices, which is further pricing out more consumers. And so kind of creating a negative spiral there, as vehicle prices trend up. Meanwhile, the amount used vehicles consumers are putting toward their down payment dropped a little over 2% year over year, to almost 4000 in q1 this is a result of both interest rates lowering gradually, while vehicle costs have risen at the same time, according to Edmunds, essentially since the amount it takes for a down payment to meaningfully reduce a consumer's monthly payment has grown as vehicle prices rise,

Unknown Speaker 17:25:55
there's less incentive to put more money towards it, especially while lower interest rates mean that there's less penalty for staying in the loan longer, consumers have continued to prioritize monthly payments above All else, according to Edmund, and we see that as around 22.9%

Unknown Speaker 17:26:11
of all new vehicle purchases in q1 had 84 month or higher terms. This was actually a record for since they've started recording it for dealerships, those affordability pressures may make updating and maintaining dealer data more important to obtain capital and lines of credit from lenders. So subprime lenders like carvon Financial told me that many dealerships currently are either using antiquated systems or embellishing data, resulting in sort of garbage in, garbage out or unhelpful data to position themselves better during this period of affordability pressures, dealers should regularly follow up on data entry, speak with capital providers to make sure the metrics that they're providing are relevant and ensure that the data that they're tracking actually aligns with their sales. And this may become increasingly important. Karvant mentioned to me as sub prime auto retailers face rising funding costs related to the Iran war, which truth previously reported on and spoke on here a few weeks ago, so be sure to check on some of her coverage if you want more details on that. That is it for me. So I'll turn it back to Johnnie for some power sports highlights from last week.

Unknown Speaker 17:27:17
Fantastic. Thank you for that update on the power sports front. Electric Boat maker art is targeting commercial marine financing opportunities tied to the.

Unknown Speaker 17:27:26
Shift to electric vessels,

Unknown Speaker 17:27:29
even as traditional boat demand declines with us, registrations down 18% year over year amid affordability pressures. Meanwhile, AI is emerging as a key competitive tool in power sports, retail and lending, helping dealers and OEMs navigate uneven demand with faster insights through adoption.

Unknown Speaker 17:27:52
Still, adoption remains gradual as the industry balances technology with this traditional high touch sales model.

Unknown Speaker 17:28:01
Lastly, maximal groups, 2025 revenue fell 34% year over year amid a strategic pullback in wholesale volume.

Unknown Speaker 17:28:10
Margins improved significantly due to those cost controls, as well as pricing discipline and a focus on strengthening dealer channels for long term growth. So all three of those can be read on the powersport side of the industry from last week,

Unknown Speaker 17:28:27
as for this week, we will have further updates on the impacts of the Iran war, as well as trends across risk management funding and technology,

Unknown Speaker 17:28:36
in addition to the power sports market.

Unknown Speaker 17:28:40
As a reminder, our inaugural auto finance capital summit takes place May 11 and 12th in Nashville. Auto Finance Summit East also takes place May 11 through 13th in Nashville. Be sure to register for our spring events as always. Thank you for joining us on the roadmap, and be sure to follow us on x and LinkedIn. We will see you online at auto finance news.net, and here next time

Unknown Speaker 17:29:09
you

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