Risk to US auto lenders is set to increase following plateauing car sales and increased competition to finance car loans, according to a report by Moody's Investors Service. Sales of new cars and trucks in the US in 2016 hit a record annual high of 17.4 million units, and although Moody's expects that figure to dip to 17.55 million units in 2017, it warns of the dangers of the 'trade-in treadmill', in which car dealers add an amount equal to the negative equity to a loan for a consumer's next vehicle, but extend the length of the loan.
Risk to US auto lenders is set to increase following plateauing car sales and increased competition to finance car loans, according to a report by Moody's Investors Service. Sales of new cars and trucks in the US in 2016 hit a record annual high of 17.55 million units, and although Moody's expects that figure to dip to 17.4 million units in 2017, it warns of the dangers of the 'trade-in treadmill', in which car dealers add an amount equal to the negative equity to a loan for a consumer's next vehicle, but extend the length of the loan.