AFSA released its quarterly Consumer Credit (C3) Index survey of leading providers of consumer credit, including mortgages, vehicle financing, personal installment loans, and credit cards.

The C3 Index is the only national survey that provides a look into AFSA member companies’ perceptions of business conditions and key business indicators, including how they see the consumer-lending environment evolving in the coming months.

You can read the full report here.

The C3 Index provides industry insights beyond what is available in other economic surveys or government statistical reports, and this quarter’s data highlights the ongoing concerns both consumers and credit providers are facing in uncertain economic times, and the challenging environment facing consumer lenders faced in 2024.

Top Line Results

High interest rates, stubborn inflation, stressed and anxious consumers and a hostile regulatory climate raised headwinds in the 2^nd Quarter for the consumer finance industry.

• The survey results indicate that the business environment for consumer credit providers deteriorated in the second quarter of 2024 when compared to the first quarter. The previous survey, in which lenders were asked to compare conditions in the first quarter of 2024 to the fourth quarter of 2023, also showed business conditions had weakened.

There is some good news, however: The margin between those reporting overall worsened vs. improved business conditions narrowed in the second quarter.

• The percentage of respondents reporting conditions improved vs. those who reported worsening conditions was higher than in the previous survey. Of those surveyed, 29.2 percent reported conditions worsened in Q2, 20.9 percent said they improved, and half (50.0 percent) claimed they were unchanged. In Q1, 38.6 percent reported conditions worsened, 19.3 percent said they improved, and 42.1 percent claimed they were unchanged.
• When asked if customer demand for loans, funding costs, and performance of outstanding loans improved, worsened, or stayed the same in Q2, respondents felt loan demand improved on balance, but that funding costs and loan performance

Looking ahead, lenders’ views on the six-month outlook were less optimistic.

• 2 percent of respondents expect overall business conditions to worsen, 25.0 percent expect improvement, and 45.8 percent expect them to remain largely unchanged, a reversal from the first quarter, when more respondents expected improved rather than weaker conditions.
• Survey participants were asked whether they expect customer demand for loans, funding costs, and outstanding loan performance will improve, worsen, or stay the same over the next six months. While expected loan demand and expected funding costs remained positive in Q2, expected loan performance was increasingly negative in Q2 compared to Q1 sentiment.