Automation fintech Open Lending’s certified loan volume decreased for the second consecutive quarter in Q3 following six quarters of growth. 

Total certified loans, or “certs,” decreased 5.3% sequentially and 14.5% year over year to 42,186, according to the fintech’s earnings presentation. Credit unions and banks accounted for 86% of certs while OEM certifications made up 14%. 

“In the third quarter, our non-OEM business, primarily credit unions, was essentially flat year– over– year in certified loans,” Chief Executive Keith Jezek said. “This demonstrates the strength of our core credit union business, while the large universal banks reported auto loan originations down 30% to 40% year– on– year.”  

Jezek was named chief executive in early October after the retirement of co-founder and former CEO John Flynn. Flynn remains as chairman of the board of directors following his retirement. 

Used-vehicle certs declined to 88.2% of total loans in the third quarter compared with 90.7% in Q3 2021, according to the presentation. New vehicles accounted for 11.8% of cert, up from 9.3% in the same period last year. 

The percentage of indirect certs dipped 60 basis points (bps) YoY at 55.1%, compared with 55.7% in the same period last year, while refinance certs clocked in at 28%, compared with 28.9% in Q3 2021. Direct certs increased 1.6% YoY to 17% in Q3. 

Auto loan origination volume clocked in at $1.2 billion, a drop of 3.6% sequentially and 1.7% YoY. Open lending will continue to maintain its “rigorous underwriting standards” and look to grow originations through the current economic slowdown, Jezek said.  

The fintech expects to finish 2022 with between 160,000 and 170,000 total certified loans, Chief Financial Officer Chuck Jehl said during the earnings call. At the end of Q2, Open Lending adjusted its estimate of total certified loans for the year to between 155,000 and 185,000.  

Open Lending’s quarterly results come on the heels of a fresh partnership and modifications to its underwriting programs. The Austin, Texas-based fintech partnered with America First Credit Union (AFCU), allowing the credit union to become a full spectrum lender by expanding its credit box to near and nonprime consumers through the fintech’s protection program. Open Lending and AFCU are currently in the process of integrating the fintech’s technology into the credit union’s automated loan origination system. 

Additionally, Open Lending added 84-month loan terms to its credit offerings in June for near nonprime borrowers on new and used vehicles that are up to 4 years old with fewer than 60,000 miles. The fintech expanded loan terms to combat rising monthly payments, which are pushing subprime consumers out of the market. 

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

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