From some of the largest financial institutions around to new, but growing, entities, auto finance has re-emerged as a growth sector in the credit market. Given the necessity of an automobile in the lives of most Americans, it is no wonder that the picture has improved in this business faster than in other parts of the credit spectrum. New Age Financial is positioned to help investors benefit from this strengthening trend, while still aggressively protecting their capital.
The Auto Finance Market
Positioned near the top of the group, AmeriCredit Financial (NYSE: ACF) was recently offered $3 Billion in a tender offer from General Motors. ACF represents one of the largest providers of auto finance operating in the world today. Even with all of GM’s monetary problems, they were able to identify that value. While ACF did not accept the offer, they did successfully extend their credit lines by $300 Million, allowing them to extend an even greater number of loans.
Similarly, Nicholas Financial (NASDAQ: NICK) reported a 36% increase in earnings that was driven primarily by a drop in delinquency rates. Details like these are readily available on the newswire and highlight some of the broad signs of recovery within this space. New Age Financial is well versed in these developments and can help you to take advantage of these trends.
The Nature of the Asset
One of the significant reasons why a broad based recovery has been observed in this sector faster than in others is due to the nature of the asset. Simply put, people need cars to function in their daily lives. American society has become impossibly reliant on its cars for such basics as shopping and getting to work. Therefore, unlike the housing market, where renting is an option, or the credit card market, where simply defaulting is an option, individuals need their cars to survive.
The role that cars play in our daily lives mean that even people with damaged credit are likely to extend themselves to make their car payments and make sure that they do not default. In many cases, a default means not only the loss of the car, but the loss of the job that the car facilitates. The pure necessity that cars represent has helped them to rebound faster and stronger than many areas in the credit market.
New Age Financial
Given the strong reversal in the credit market for automobiles, there are significant opportunities to earn a healthy profit by participating. Lenders who are wishing to extend their lines of credit and take on additional loans in this space need capital to leverage and grow. New Age Financial is highly familiar with this market segment and can help tailor an investment approach designed to benefit from this growth opportunity. Furthermore, we understand that most investors are putting capital preservation at a higher premium than ever before, so we design our investments to properly balance risk and reward.
We invite you to contact New Age Financial for more information.