Used car finance deals are shaping how analysts model consumer credit risk. In a rising rate environment, loan default probabilities for used car buyers are projected in the 2.5%–3% range. This has become a key consideration in auto finance stock valuations amid broader market volatility. But, according to Sethi, one of their biggest problems has to do with their financial advisor. Sethi regularly recommends that people avoid working with an advisor who charges a percentage of assets under management (AUM) as this means the more assets you have, the more you will pay. Some advisors will instead charge a flat or hourly fee. Find an expert who knows the market. Compare trusted real estate agents all in one place. In the current equity market environment, used car finance deals are reflecting tighter lending standards, mirroring macro trends in the financial sector. Publicly listed auto finance companies are projecting moderate loan growth, as bond yields hover above 4%, reducing affordability for buyers. Stocks in this niche may see volatility as credit spreads widen.
