#240 - Credit Crash w/ Melinda Zabritski

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It is. I tell you, it's been fun doing it too, Jeff. And we're about to bring you in to do a little video with us too. So the next couple weeks, hopefully you'll see that subscribe, like subscribe to our YouTube channel. Tell other people about the newsletter. I think it's really fun. It's really short. It gets you in the mood to conquer the world for the week, right?

Yep, it does. And without further ado, here is our interview with Melinda Zabrinsky.

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast brought to you by the Buckeye Dealership Consulting. Today we have a guest. So every so often I just kind of throw out random emails to people that I don't ever expect to answer, but Experian actually answered me and their PR guy was like, great. Yeah, let's get Melinda on here. She could talk all about this. So really kudos to Experian because I do. We reach out to some big names and sometimes they're just like, you don't hear everything back. So first off, thank you, Experian. Thank you, Melinda, for coming on and chatting with us today. And secondly, Luke, doom and gloom, I want to talk a little bit about auto default rates.

I think it's a great time to start talking about auto default rates. One, interest rates are going up. CPI data came out yesterday and it's just God awful bad. And what's funny is we're seeing interest rates go up, we're seeing bad CPI data, but we're seeing dipping in car pricing. And so it's getting. Getting a little scary. And I think over the next six months, we're definitely going to see a rise. I've already started to see a rise. I actually sent you an email, a text yesterday, Jeff, and said, hey, charge offs are coming, in case you didn't know. And like Jeff and I talk about sometime, I'm on the east coast and it seems like everything moves west. It starts over here and goes that way. Except for weather. Weather goes other way. But yeah, Jeff, it's a good time to talk about. And I think dealers really need to sit up and pay attention to what's going on.

Okay, Melinda, introduce yourself to the community. Who are you and what do you do at Experian Sure.

So, Melinda Zabritsky, I am a senior director of Auto Solutions with Experian Automotive. And one of the things I've been doing is since about 2007, analyzing the auto finance market, looking at what are consumers buying, who are the dealers selling the vehicles, what are the finance characteristics as well as how are consumers paying those auto loans.

That is exactly what we want to know everything about how much time is 100%. So let's jump into it. Melinda, what are you seeing right now? What is Experian seen in the auto credit realm?

So today's market is really unprecedented. You know, we certainly saw what happened to the industry with the recession. 2009, 2010, know, was pretty much, you know, benchmark years of just, you know, delinquencies, et cetera. This time it's very different. You know, we are in an environment with, of course, all the inventory shortages really driving up loan amounts. You know, we're seeing consumers taking loans out that are, you know, $10,000 more than they were just a handful of years ago. You know, monthly payments are, you know, in the $500 and $600 range, even for used cars. And we are beginning to see delinquencies go up. We're not quite at pre Covid levels, but certainly seeing those increase is that Melinda does.

So we know that the higher, higher car payments are going to, of course, affect delinquencies and charge offs. In the end. I've seen our payments rise $100 in the last 18 months. And so that I think that's across the board. What we're about to see though, and what we started seeing in the last 60 days, interest rates rising. Do y' all see that? Is that going to start affecting our payments going to go higher and our charge off is going to become more.

Because of this, very likely for most of the lender types, we have certainly seen an increase in those rates. What was very interesting in Q2, which is the last full quarter that we've been able to analyze, there were increased rates across the board. With the exception of credit unions, we have not yet seen credit unions raise rates. And it had the impact of driving credit union share to just a tad behind the banks. And until they raise rates, I would expect to see those credit unions continue to increase even more share. But certainly those increase rates helping drive up those payments. And of course, we're also seeing those terms continue to push out even further. In new cars, the terms kind of leveled out, but for used financing, we're seeing terms a good 2, 34 months longer than what we even did this time last year. So, you know, dealers and lenders still have that term to use as a trigger to try to keep those payments down. But those increased values in the vehicles are just too high to really keep the payments down with using term. But yeah, when those payments increase, we're going to see delinquencies rise as well.

Let's, let's talk about two things. They're very interesting two points you just brought up. We have seen a huge, in the last just three weeks, huge penetration from credit unions that we have never seen before. I think out of the last 20 deals we've done, this is no large, it's going to be, this is all deals across the board. 13, 12 or 13 have been credit unions. We've never seen this before. Why is this happening, Melinda? This has got to be, it's, this is a bit unprecedented, I think. Why is this all of a sudden happen? Is it only because of the rates?

I think most of it is rate. You know, you've got lenders have gone up a couple hundred basis points compared to last year. I'm actually seeing credit union rates from a Q2 standpoint lower than they were last year. You know, in an environment where we should be seeing those rates go up. So typical to credit unions, you know, there it's, it really fits today's model. They, they focus on used, they focus on longer term loans. So you'll typically find a longer term loan with a credit union than you will with a bank or a finance company and that's going to lead to that lower monthly payment. So you know, if that deal is being worked in the traditional foursquare, looking at what that payment's going to be, it's going to be a credit union deal that's going to be the most appealing.

How are credit unions able to keep that interest rate as low as they are? I mean, I guess they don't have to answer to shareholders. Is that the answer there?

It's a different cost of funds structure. It's a different business model. Again, it's typically not a profit model. And so they're able to offer rates that are just completely different from the other lender types. And it's also a different regulatory body that oversees the credit unions.

Well, their board governed, so their board's probably a little bit slower to adjust certain things. And they're still paying you less on your savings account because that hasn't adjusted either. Right. So they're giving you less. They're keeping their rates up. Front less just to acquire the customers. But I have heard and the credit union guys I've talked to lately, and even ours, I've seen an uptick. So it'll be interesting to see when you guys analyze Q3 if you see those credit unions finally coming around and adjusting rates up.

Yeah.

And the second thing you talked about were longer, longer terms, which we've all had to deal with that. What is the average term you saw in Q2 after you analyze the data?

For new cars it's around 69 months. And for used it's actually around 68. 72 months still remains pretty much the number one term for both new and used. And we're seeing an increase in the 84 month terms for both new and used.

Are you seeing 120 months?

They're out there. There's not a whole lot of them. Yeah, so yeah, there are a few. You don't really see them in the used vehicle space. When you do see it in new, typically you'll see it on things like sprinter vans and some of the really big full size trucks. So this seems to be more of purchases that are individuals but being used more for like small business commercial purposes.

Ken, can you tell us what you saw in Q2? And it looked like. So we've seen this longer term really explode, I think in the last three or four years. When is the normal charge off happening? Do you all have a month where this really goes sideways?

Yeah. So most of the delinquencies we see tend to occur typically within 16 to 18 months after the loan opens. When it's a legitimate transaction. You know, you still see increases in things like, you know, the straw man and the fraud purchases and those tend to charge off pretty quickly. But mostly it tends to be around 16 to 18 months into the trend into the loan.

And that's the first delinquency or is that a charge off?

That's typically when it'll go to something like a charge off.

Okay. I think, I mean that's what we see. Jeff, do you see anything different?

Yeah, yeah, I think that's pretty standard. Which is interesting that that's similar. I mean even with our buy here pay here model doesn't really change much as far as when we might just change a little bit. You know, the sub. Subprime might be the severity of the charge off, you know, a little bit more drastic.

Yeah, that's. It is funny because you would think prime loans wouldn't perform as well as I mean subprime loans wouldn't perform as well, as prime loans, do you see a vast difference in that, Melinda? I mean, do y' all have that data?

Yeah.

So when we, when you look at the delinquencies across the different origination tiers, you know, the majority, of course, will be more in the subprime space. There's very little delinquency we see when looking at the prime originations. What is interesting though is when you do look at all the different risk tiers of originations and look at delinquency and especially delinquency by term, it tends to, tends to be the 75 month loans that will have the highest rate of delinquency. And usually when you get up to the 84, those tend to have very low, much lower levels of delinquency because they tend to have a little bit stricter underwriting. But it tends to be those 75 month loans across every single risk tier that will have the highest rates of delinquency.

That's, that's very interesting. And does the 84 start turning to business loans? Is that the reason?

No, it tends to be higher. Yeah, it tends to just be higher credit scores, lower LTVs. What you find on the 75 month loans is it tends to be a consumer who was going after a 72, but the monthly payment just was a little bit too high. So you add another extra month or two to that, they're able to qualify and it's a little bit of a stretch.

It'd be interesting to know the stats on that, Luke. Like the difference between a, a standard, like, you know, 36, 42, 48, like, and then the people that are on like the odd number, like, wait, if you had to add a month or two to make this payment work, that's probably.

Well, that's, that's the reason we've always wrote wrote loans just on quarters. So you'd either have 24, 27, 30, 33, 36. And we try to stay on that, I think for that very reason.

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I love it, Jeff.

Anyways, back to the episode.

Melinda, on what term do you see the lowest charge offs and the lowest delinquency rates?

Those you tend to see on some of the shorter term loans. Like, like the 36, you know, the 48 months. Those, those tend to have the lower rates of delinquency.

Yeah, I would think so.

Yeah, it makes sense. And you're thinking like, maybe there's somebody who they, they put so much down or finance so little, they're keeping it a very tight term. Maybe they had to finance to get that price. You know, we see those things.

So we'll probably see the Highest fraud in 12.

Oh, really?

Yeah.

The highest fraud in a 12 month. I wonder why.

Yeah, it might be somebody who brought in cash. They know they're gonna take the car and run. So let's finance it at 12 months and off they go.

Oh, and then you'll never see me again.

Yeah. So if we take that data and we know that probably people's. For the next, let's say two or three years, people's credit is going to get worse.

Right.

What is our obligation? What should we do as independent dealers to help these customers make sure they're not in bad loans and help them along to make sure this doesn't get any worse?

Yeah, and I think there's certainly the eye towards affordability, which is of course, right now we're seeing not as much in the used car space, certainly in the new car space, a lot of dealer markups and such, which are just putting consumers in loans that they're upside down to begin with. But overall, I think it's a lot of. There can be a lot of assistance that dealers can make for consumer education. You know, we do tend to see right now when consumers are opening up auto loans, they're seeing improvement in their average credit scores. I'm seeing scores go up as much as, you know, 20, 30 points just by having an auto loan and making those payments. But then there's also tools. You know, Experian has Experian Boost, where especially in the, in the independent world where a consumer might not have a lot of credit history, so they might not be able to qualify for, you know, a quote unquote traditional loan, you know, things like Boost, which takes into consideration, you know, rent, even streaming services, utilities, those, those positive, you know, payment behaviors can help improve a consumer's credit score and potentially put them in a loan with a lower rate and keep those payments down.

I'm glad you brought up Boost because I'm always, and I think I've talked about this before, Jeff still doesn't, doesn't know what I'm talking about. When I asked about alternative data. Can you talk about alternative credit data, which you just brought up and how, and how experience working it into, into consumers credit?

Sure, absolutely. So when you look at credit, there's your traditional credit, so your mortgage, your credit cards, your auto loans, you know, those are those trade lines or accounts that show up in your traditional credit bureau. Then there are things like, you know, online loan type programs, utility data, maybe you've gotten a title loan, you know, from, from a title loan type company that's basically considered alternative data. Again, utilities, streaming services, things that you, maybe that are regular payments, that you're making positive payments, but they aren't things that show up in the traditional bureau. And those are data points that many lenders use to help make better decisions. You know, if somebody's got positive payment behavior in this alternative type of universe, then lenders can maybe buy a little bit deeper, you know, maybe go down a few extra points in a traditional credit scoring model by saying, hey, you know, this consumer does a good job paying these other things. You know, they're paying their cell phone bills, they're, they're paying their utilities, they're paying their, you know, their streaming services. So using the combination of those, you know, alternative data points plus traditional can help lenders, you know, even buy a little deeper and improve their, their lending decisions. So it's a, it's a positive for consumers.

Yeah, it's funny that your, your cell phone payment doesn't show up on your credit score. And I know some of these households, their cell phone bill rivals a car payment.

Exactly.

I mean, you paid that like Clockwork for the last six months. Six years. Like charge off? Well, for a car loan.

Yeah, those charge offs show up. It's odd that the other doesn't. I agree with you there, Jeff, because if somebody, people pay necessities, right, Melinda? They pay their cars, they pay their cell phone and they pay the power sometimes. But those are really important, important things. Help me here. When I look at a credit file, what I see a lot of times is a lot of student debt. And this is in the news. This is, you know, they've had a deferment, I guess people with student debt for the last two years almost. What has this done to credit files? With the deferment and with this soon to be forgiveness, what is that going to do to credit files?

Well, unfortunately, that's not a topic that I really can speak to. I spend most of my time really looking at just the pure auto data and registrations and auto credit. So unfortunately I am not the right person to talk about that one.

Really good question. Bad, bad, bad excuse. So, but we were, I got another question, but we were talking earlier about auto loans and how dealers could construct your loans better for consumers. Does you know consumers having gap coverage and vehicle service contracts? Is that something that dealers can use to actually help customers? Because without gap they can be in search bad situations and without service contracts they can be in really bad situations.

Well, certainly if that, if that aftermarket product comes into play and helps keep that consumer's debt down, absolutely, it can help. You know, we typically find, you know, with, you know, from an accident standpoint, you know, if you wreck your car and it's, you're not going to make those payments. So those types of products absolutely can help a consumer.

What's interesting to me is that when you talk about these defaults increasing or people's credit scores being damaged, you know, or maybe deemed because of the market, it's really for us in, in our space where we're, you know, maybe a buy here, pay here or a subprime. It really has to do with the lenders. And that's what's interesting is so many of these lenders say, oh well, you know, we've got so much money, we're desperate, we're going to buy down to the 600 credit score, we're going to buy down to the 620 or 630. And as those lenders start to tighten up, that's kind of when business gets good for guys like me that are like, okay, yeah, you're not kind of playing in my sandbox anymore. You've gone back to your own, you know, above 700 type credit score customers. Do you see any of that or is that in your wheelhouse where you're seeing lenders, maybe some of these big lenders saying, oh yeah, we're not really going to take a risk on these guys anymore?

Well, there's such a mix of lenders out there, you know, when we're looking at the big banks, you know, so many of them really do focus on the very prime space. I'm actually seeing a few national, big national banks actually looking to bring alternative data into their wheelhouse and actually start buying a little bit deeper. And then of course you've got your traditional finance companies who specialize in subprime. But if anything, right now we did see a while ago kind of an immediate reaction of lenders kind of leaving subprime, but I'm starting to see almost the reverse of that right now with more of the big lenders even looking to go into subprime a little bit. And in part, it's the game for market share. With credit unions picking up so much share, lenders have to. When lenders gain share, they're either looking at moving into new geographies, moving into older model year vehicles, or buying a little bit deeper. So there's only so many levers you can pull when your share starts trickling away.

Yeah, it's really interesting. And to see a weakening economy and higher inflation, does it hit everybody equally or does it hit middle class? And prime customers like you were talking about, they stretched to really afford that $700 a month payment on that Telluride or whatever. They got into that. They probably shouldn't.

$1,200 a month.

Yeah, yeah, some ridiculous payment. And now they're like, oh wait, where is your subprime and non prime, you know, sub subprime customers? They always are kind of, you know, they're never stretching too far. Nobody went too crazy for them, but their life's always kind of making ends meet. It just, it'll be really interesting to see what subsection gets hit the hardest.

Yeah, and that's, that's where we see consumers change the types of vehicles they're purchasing. You know, we, we, and we started to see it some in, in Q2 for a while. Up until Covid. For a while, we had been seeing more prime borrowers move into used vehicles. As payments were going up, they were looking at used vehicles and we saw more prime purchasing used. In 2020, when we had the peak of COVID we saw a lot of incentives out when we still had inventory. And so you saw a lot of prime consumers go back into new cars. And we're starting to see them go back into used cars again, part due to inventory. But also with all the dealer markups you're seeing on new, we're seeing more and more consumers move into used again.

Did you see in the, in Q2, speaking to that, did you see lower, lower model years creeping into that?

Okay, absolutely.

Significantly, yeah.

Not, not a huge point. But we are starting to see more, more older model year vehicles making up a larger portion of what is being financed, which makes sense, you know, especially with the, the prices on used cars being so high that to get something affordable, you do have to go back a few more model years. And also considering so many of the late model year vehicles are all SUVs. So when you have a consumer looking for a lower payment and they're looking for a car, it's going to drive them into older vehicles. Just because there's not a whole lot of late model vehicles that are sedans or cars.

Yeah.

Yeah. And maybe you can agree, I see such a huge difference in price. I guess, I guess it's. It's like watching the auctions now and seeing these lease returns come off and these rental cars come off of rental. You know, Hertz is dumping a ton of, you know, I don't know, accents or whatever they're getting rid of these days, these altimas and Chrysler 3 hundreds, but they're like 50,000 miles and it's a $15,000 car, you know, and I'm like, that's affordable. But then the next level is like a $50,000 car. You know, like if you want to get a Telluride or a truck or something, that's not just a base economy car. So it's such an interesting gap between, you know, like your base model, cheap rental returns and you're like desirable stuff. I don't know. It's really interesting right now in Q2.

Did we still see an increase in an overall loan amount or has it leveled off yet? All right, so we're breaking it again, Jeff, to talk about Pastime gps. I use Pastime. Been using it for years. If we install it right, we find the car quickly and we're able to get it. And also if someone decides to go on a joyride on a test drive and not bring it back, we can find them. So, Jeff, if you're going to use a gps, which I think everybody here pay, your store should, and probably every retail store at this point. Pastimes the people to go with, right?

Yes. I have wired GPSs in all my loaner cars and in all my assets. So my trailer, my lot truck, you know, I strap one to my bicycle and like my dog's got one attached to his belly. And then I do the wireless ones on things like my pets, my wife, my keys. I'm just kidding. But, but the great thing about the wireless is like, you know, we delivered a car last night. I wasn't here, the mechanics weren't here. They delivered a car after hours and didn't have to worry about it.

That's great.

I check my email and I see that, oh, I had, you know, three GPS power UPS today. That means we sold three buy here, pay here cars. I can jump in, look at the data, see how the deals went. It's so it's, it's really just, it's such, it's, it's extremely reduced to hassle on my after hour buy here pay here deliveries. Wireless. Way to go.

Never, never thought about that. Good job.

It's leveled off in the past couple quarters, but when you compare the loan amount right now to what it was, you know, a couple years ago, you know, we're seeing, we're seeing some pretty big increases. You know, I was looking at average loan amounts just for the independent used space and they're almost $24,000 this year compared to, you know, let's say 2018, when, you know, we're talking 17,000.

So do you think we'll ever go back? Do you see a world where it ever goes back?

I think it's going to take a few years. You've got inventory that has to level out, you know, but at the same time, even when the availability of inventory levels out, which is going to take several years, you mentioned off lease and leasing has dropped considerably where less than 20% of vehicles are being leased right now for new. So that's going to impact what's coming back off lease in a couple years. So that'll make that tight. So it's going to be some time before that levels out. I would expect it to come down a little bit. But you also have to take into consideration not only are we elevated in values because of just, you know, supply, demand, but again, we're moving away from cars. You know, 60% of all the new cars that we're buying right now are SUVs, you know, CUVs, SUVs, so fewer and fewer sedans, fewer and fewer, you know, more Affordable vehicles, you know, from a car standpoint in the future. So you kind of have those two things working against us for the next several years.

Yeah, yeah. If you're not selling affordable cars today, that means I'm not getting affordable cars three to five years from now.

Exactly.

So then that, that takes that used price even higher than it is now. That, that seems like a bad situation for the, the used car market in five years.

Yeah. And then what are we leasing? Yeah, and we're leasing trucks and SUVs. Now. I, I only look at the retail side of things. I mean we all know of course fleet right now is, is under prioritized. But when you look at like the top 10 cars that consumers lease on the new side, they're all trucks and SUVs. There's like one sedan in there.

Well, that's, I mean that's all they're making. You know, it's, it's gonna, it's gonna be.

Because that's, that's where they're focusing the, the few resources they have are on their higher margin cars.

Well, and it's also consumer demand.

What you may not know this data have, has experience started to pull out any EV data from the overall loan portfolios?

Absolutely. We've been focusing on EV quite a bit. Right now we're seeing about 5% of the new car market is made up of EVs. We're starting to see the used EV market grow a little bit. I think last year I think we sold like was like 60, 70,000 used EVs. This year we're going to certainly surpass that. I think just the first six months we were already at almost 50,000. But yeah, we certainly, we keep track of fuel types and watch the EV.

Space and do we as a whole, do we think that that portion of auto loans are going to perform better or worse or, or do we have any data yet to know?

So the EV market is pretty much the lowest delinquency space. It's only just a couple basis points. Quite honestly, it's extremely low delinquency. But it also attracts a much more prime borrower both on new and used. You tend to see the average credit scores in the mid-700s. But we're also starting to see that come down a little bit because we're finally starting to see more options other than Tesla. So there's certainly some more affordability coming into the market and it certainly is growing.

It'll be interesting to see Luke, as you see those, like she was saying, become more affordable. But Then also, as you see them drop in, their warranties fall off, you know, now all of a sudden, my cost of ownership goes up. So am I willing to stick with this car when it's nickel and diming me to get death? Whereas, you know, we have a lot of customers that are like, oh, I have a 700 payment and I'm facing a new transmission. I'm just going to let this go or I'm going to start making my payment.

I don't think you're going to see one. An EV nickel and dime your death. It will. $101,000.

Yeah, yeah, yeah.

Because of the batteries.

Once that thing's out of warranty, you're making a decision of whether you put in a $20,000 battery or let it go back to the bank.

And that's something I think we definitely need to. To look at. Melinda, do y'. All, do y' all take into account in normal, normal data failure of cars or anything like that? Y' all get that. Is there any way to track that by experience? Like if a car breaks down during a loan?

Some of that. There's a lot of different data streams of, you know, accident data, repair data, aftermarket data that, that we do track. I readily know if there's anything that we can get to just right off hand that, that can identify. Especially the EV space is still a bit challenging to really track the things like, you know, battery cycle times and replacement of those specific batteries. So some of those, those data points are, are. Are still out there and we're still constantly looking for additional data points to, to help that out.

Did you, did y' all see anything interesting in hybrid data before? Because you should have a lot more data on the hybrids than you do EVs.

Yeah. So out of all we have registration and vehicle data from, you know, for many, many years, and fuel type is one of the fields that we do have. So we can distinguish between hybrid, hybrid, gas, plug in, straight ev, you know, hydro fuel cell, biodiesel, you know, all of those fuel types we can, we can distinguish upon.

And do you have any data on the hybrid? Since we've had so much data there is it still prime customers buy mostly hybrids. You know, where does that go?

Yeah, yeah, you still see a bit more of a prime consumer and a hybrid because again, you've got a little bit higher, higher price vehicle, higher loan. So they do your hybrids, whether it's, you know, ev, plug in, hybrid or what type it is, you do, you do tend to see still a bit more of A prime consumer there.

So the data is probably pretty good.

Yeah, it's funny like so in our industry, in my industry, buy here, pay here. If the car's not running, the customer's not paying. And I wonder if there's data to support that on the new car side. Like what does the delinquency rate change if my car is under warranty or out of warranty. That would be kind of an interesting anecdotal thing. You know, does that same philosophy apply for prime buyers? If my car's not running, I ain't paying.

Yeah, anecdotally you do tend to hear that from the lenders. We, we don't have the, we sometimes the warranty data, you have to kind of infer that be so hard.

Yeah, yeah, yeah. What were the, what was the year in mileage when we picked it up? And was it a 3, 336 or was it a Hyundai or a kia with a 500? You know, to be very confusing, but.

I mean a majority of my charge offs, it doesn't really speak to my car. I don't think maybe more to my customer. A majority of our charge offs are because of the cars are broken and the customers just give up on the car. And I would think that runs across the gamut from. But I, I don't, I mean, prime. A lot of times prime buyers have other access to money and they can get their car fixed. Subprime buyers do not. So I think that just takes that.

Yeah, we do see that. So auto check our vehicle history, product. We can, we can look at the vehicle history and we tend to see that if, if as a lender you originated a loan and the vehicle had clean title, consumers paying. And then if you see something like a salvage, you know, a salvage title come in or you know, major accident damage, those, those negative vehicle history events across pretty much every single risk tier are significantly more likely to end up in charge off. So yes, you do see that across whether it's prime or subprime.

That, that, that does, that does make a lot of sense. You guys. Do you get mixed up with the, I mean, do you see a lot of the auto check type data as well?

See some of it, yes.

Could you confirm that the average car has more miles on it? Is that something you're seeing the data of? I. Are these cars coming across with higher odometers staying on the road longer and longer and longer?

That is, we could certainly look at that. That is not anything that I specifically have looked at.

Yeah, I wonder if you saw that inside of the auto loans. I would assume Miles have gone up on all auto loans in Q2, right? Or no, if the, if they're getting.

Older, that I don't know.

Also something you don't know. But I'm going to bring it up because I still find it interesting to do a like a query on like rideshare, you know, so if we have these loans that are defaulting, is there any way to cross that defaulted loan with the auto check of the miles that that thing's put on? So if I put on 150,000 miles in two, it's a two year old car. I'm obviously ride sharing this thing and I'm using a consumer loan to run my commercial Uber or Lyft. And now I'm defaulting because I realized I depreciated that thing like a rock and I was only making the minimum payment to my bank. So I'm like, okay, take it back. That anecdotally that's got to be happening.

Yeah. And that's, that's been something that I think the industry has, has certainly had concerns for. I remember a couple of years ago I was speaking at a lender conference and I got asked that exact point. Unfortunately we, it's. You can't. None of the data elements around the car itself can identify whether it's being used for rideshare. You know, like to your point, if you're looking at mileage, but maybe it's somebody who lives in a very rural area and has to drive 100 miles to a grocery store. You know, so it's difficult to even infer is it mileage that's ride share. And I think there's only a few states that actually require, require you know, specific licensing around that that would make it identifiable. So there's a lot of speculation around, you know, hey, is this high mileage default vehicle because it was used for rideshare?

Mm.

That to me is interesting. I'm seeing. And where I feel like I'm seeing more of those at the auction. I mean a two year old car with 150,000 miles, it's like what in the world happened to this thing? And it's. And yeah, sure enough.

Well, Miles can see miles contribute so much to, to delinquency and charge off. I mean that's probably the, the number one. Cause it's because they, the maintenance goes up like crazy which they, they don't do and then the car's breaking down because they didn't do the maintenance. It costs more gas. The tires where. I mean, across the board. If they're more miles, there's going to be a higher delinquency and higher charge off. Jeff, you got anything else?

Yeah, I have probably so many stupid questions, probably to ask her to death, so I'm gonna stop. Melinda, anything you want to share with the community before we leave you?

I would just say right now, you know, pay attention to what your lenders are doing. Today's market, you've got lenders, you know, changing their programs frequently. So keep in touch with your lenders and, you know, keep in touch with the data that's out there and the market information that's readily available and, you.

Know, keep plugging along.

Right? Yeah, exactly. Exactly. Be aware. Be aware of the data points out there.

Well, we really appreciate Experian and Melinda giving us time today. Anything else, Jim?

No, that's what I wanted to say is just again, kudos to Experian. You guys always support the Independent Dealer. You've got a booth and you've got sponsorship at every NIADA event. And so, really, thank you for giving us your time, your information, it's been super helpful.

Thank you.

You're very welcome. Dealers helping dealers. Please leave us a review and subscribe the Independent Dealer podcast.