Industry Expertise | From Rising Insurance Costs to Repos: Managing Auto Loan Risk in Today’s Market
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The Most Expensive Time to Drive a Car
The cost of owning and driving a car is rapidly rising, not only widening the gap between super-prime and non-prime borrowers but also putting chronic strain on borrowers’ wallets.
Average vehicle insurance: $2,189 (up 19% YOY)[1]
These mounting expenses combined with a challenging economic landscape are deeply impacting losses, setting the stage for delinquency and default. Deflated vehicle values plus temporary rise in income from stimulus checks staved off delinquencies for a few years. Now, those unstable loans are contributing to 10.5 million repossession assignments projected for the year.[4]
The repo volume is familiarly reminiscent, but not identical, to the economic downturn of 2008. Yet, history isn’t repeating itself. During the Great Recession, there were more repo agencies to manage the volume compared to the deficit of agents lenders now face.
The sharp rise in delinquencies, paired with a shrinking repo workforce underscores the immediate need to proactively protect auto portfolios – from day one.
Protect Loans from Day One
Reducing losses must start at loan onboarding. Early warning signs of delinquency and fraud often show up in uninsured or underinsured vehicles. Without adequate insurance, both your borrower and your portfolio are at risk. Missing the potential for charge-off before it happens is the riskiest business of all.
The trends don’t lie:
Uninsured or inadequately insured vehicles are a strong leading indicator of early stage delinquencies.
Verifying insurance early in the loan life reduces exposure of uninsured losses from accidents, theft, or total loss immediately after purchase, and decreases loss severity by ensuring claims can be paid when the vehicle is damaged or totaled.
New Year, New Strategy
Insurance verification is one of the smartest tools that vehicle lenders can utilize to protect their portfolio. The blueprint for risk management hasn’t changed, but the techniques must evolve to meet the modern borrower where they are, with language they understand and respond to.
Traditional methods – like mailed notices – combined with proactive, digital enhancements create a smart insurance monitoring program that:
- Confirms active insurance coverage before releasing funds
- Monitors coverage lapses in real-time
- Reduces lending to higher risk credit tiers
- Bolsters overall portfolio security
As costs climb and margins tighten, the difference between a resilient auto portfolio and a reactive one comes down to visibility. Insurance verification and monitoring aren’t just safeguards—they’re strategic advantages in an increasingly unforgiving market.
Lenders that modernize how they manage insurance risk today will be better positioned to serve borrowers and safeguard performance tomorrow.
Attending Vehicle Finance Conference and Expo? Visit Allied Solutions in the exhibit hall to explore how we’re helping lenders tackle this year’s biggest challenges.
About Allied Solutions
Allied Solutions is one of the largest providers of insurance, lending, risk management, and data-driven solutions to auto finance companies and financial institutions in the US. With their consultative approach and commitment to the market, Allied Solutions uses technology-based solutions customized to meet the needs of 6,000 organizations. Allied Solutions is headquartered in Carmel, Indiana and maintains several offices strategically located across the country. Allied Solutions is a wholly owned and independently operated subsidiary of Securian Financial Group. Together, Allied and Securian boast 100+ years of industry experience.
[1] https://www.thezebra.com/resources/car-insurance/auto-insurance-trends-report/
[2] https://www.aaa.com/autorepair/articles/breaking-down-the-cost-of-car-ownership
[3] https://www.eia.gov/todayinenergy/detail.php?id=66964
[4] https://www.autofinancenews.net/allposts/risk-management/repos-could-hit-10-5m-by-yearend-with-industry-in-feast-mode/
February 4th, 2026
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