Automation fintech Open Lending has expanded its maximum auto loan terms as more consumers are priced out of the market. 

Lenders using Open Lending’s artificial intelligence-powered underwriting can now offer 84-month loan terms for near and nonprime borrowers on new and used vehicles that are up to four years old with less than 60,000 miles, representing a nine-month term increase for indirect offerings and a six-month term increase for direct offerings when compared with the fintech’s previous policy, Chief Revenue Officer Matt Roe told Bank Automation News’ sister publication, Auto Finance News..

Open Lending provides loan parameters to auto lenders looking to dip down further into the credit spectrum and then insures those loans for up to 80% of the losses.  

The fintech expanded loan terms to 84 months to give a longer term offering for near-prime consumers in an effort to combat rising monthly payments that are pushing subprime consumers out of the market, Roe said, noting that 84-month terms are typically associated with prime loans. 

“The pandemic and supply chain issues have caused loan amounts and vehicle values to go up substantially,” he said. “For the segment of the population that we serve, which is the near and nonprime auto consumer, it’s really created an affordability problem for those folks. 

“Adding those extra nine to 12 months, in most cases, helps bring that payment back down,” he said. 

75% adoption 

The offering was first rolled out in June, and “about 75%” of lenders on the fintech’s platform have adopted the new loan term, Roe said. Demand for the product has continued to grow and accounted for 12% of certified loan volume in August, he added.  

Austin, Texas-based Open Lending provides services to financial institutions like Randolph Brooks Federal Credit Union and Affinity Credit Union. The fintech has also recently broadened its model-year eligibility to meet the increasing volume of older vehicles that are getting financed in the current market, according to an Open Lending release. 

More than 400 financial institutions have used Open Lending’s Lenders Protection to originate and insure over $16 billion in auto loans since 2003, according to the release. 

Editor’s Note: This article was first published on Bank Automation News’ sister site, Auto Finance News.