The pandemic led to supply chain issues, tightening auto inventories, and escalating prices, pushing loan-to-value (LTV) ratios up since early 2021. A TransUnion study explored the effects of equity positions on loan performance, the impact of depreciation, and future vehicle values. The study predicts vehicle values will decline due to various pressures, although continued supply challenges might prolong high values. This shift could increase negative equity risks, emphasizing the importance for lenders to monitor depreciation and adjust strategies. TransUnion suggests using trended credit data, extending loan terms, and focusing on portfolio management and consumer outreach to optimize financing lifecycle and mitigate risks.

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