Rising challenges with affordability and growing fraud risks are pushing auto dealers and lenders to refine their fraud prevention strategies and improve customer experiences for continued success.
Having high-touch customer experiences helps auto dealers more effectively recognize qualified customers while encouraging more consumers to visit dealerships. Identifying lender types that are more prone to fraud and delinquencies as well as understanding lender preferences among different generations enables auto lenders to reduce potential financial losses, mitigate fraud-related disruptions, and foster stronger customer relationships.
Consumer finance and auto industry trends in 2025 show that auto loans and leases is now the most rapidly increasing sector of non-mortgage-related borrowing, even more than student and personal loans. Auto delinquencies have also risen significantly with Gen Z experiencing the most pressure as they hold the highest percentage of auto loans that are 60+ days delinquent. And with more people experiencing financial stress, car sales are decreasing while interest rates and vehicle prices continue to surge.
Fraud is another cause for concern, with synthetic identities (Syn ID) having increased by more than 50% annually for the past four years. Syn ID grew by 98% in 2023, causing companies to lose almost $8 billion. Furthermore, the delinquency rate for loans and leases flagged for Syn ID is estimated to be at least three times more than the portfolio average.
Auto lenders and dealers who understand their customers’ preferences and actively set up prevention measures against Syn ID fraud and delinquencies are the ones who will gain the trust of new customers and continue to thrive in the industry.
