Many of the fastest-growing companies of recent years have come from the financial services industry. Lenders and others who cater to specialized needs have proved able to grow especially quickly and post particularly impressive financial results.
Companies like Consumer Portfolio Services, for instance, have impressed investors by repeatedly setting new records. There are a number of reasons why many analysts belove such businesses will remain among the industry’s top performers for a long time to come.
The Modern Automotive Market Suits Indirect Lenders Well
Many car and truck purchases are still enabled by financing provided by banks, credit unions, and other conventional lenders. On the other hand, indirect lenders who purchase loans that are issued by dealers have taken on an increasingly prominent role in the industry.
That seems likely to continue for quite some time to come, given current conditions and established trends. Some of the factors that have improved the business outlook for many indirect lenders are:
- Tightened bank standards. When the financial crisis of a decade ago arose, banks responded, in part, by tightening up their consumer lending standards drastically. The short-term result of that pullback was to cut millions of hopeful car buyers off from financing completely. While most banks have loosened up their lending standards somewhat since, the bar remains higher, on average, than it was before the crisis. As a result, more buyers than in the past feel forced to look beyond banks for automotive financing.
- Rising car prices. It used to be quite common to buy a late-model used car with cash. Modern cars last a lot longer than they used to, though, and secondary-market prices reflect that fact. People seeking reliable pre-owned cars now more often hope to use financing for their purchases. Spending quite a bit more than used to be the norm has become common among buyers of both new and used cars.
Many More Reasons to Expect a Bright Future
Factors like these have helped boost demand for the financing enabled by indirect lenders. With these and other trends seeming likely to continue well into the future, such companies could keep tallying up impressive financial figures for a long time to come.