About 25% of Ally Financial’s auto loan and rental customers – over one million to date – have taken advantage of an offer to defer payments for up to 120 days, according to the lender.
This is a sign that even consumers with good credit are worried about their household finances during the COVID-19 pandemic,
The vast majority of those 1.13 million customers have never defaulted on Ally, CFO Jennifer LaClair said in a presentation on Ally’s first quarter results. Specifically, 70% had no history of delinquency with Ally and 76% had no previous extension with Ally.
In this case, the postponement means that Ally waives the late fees, but the interest continues to accrue. Only 12% of consumers who requested payment deferrals were more than 30 days late when they requested the extension, says LaClair.
Dealers are also postponing
Many dealers who have commercial loans with Ally also take advantage of payment deferrals, Ally says.
He reports that he had commercial accounts with around 3,300 dealers at the end of 2019, out of more than 18,000 dealers with active accounts for consumer loans and leases.
Ally says she processed more than 1,000 dealer applications for the Small Business Administration’s Paycheck Protection Program, which resulted in approximately $ 850 million in dealer loans. The loans are designed as a stopgap to keep workers on the payroll and to cover concession expenses such as rent.
Deposit in March
For the first quarter, Ally reported a net loss of $ 319 million, down from net income of $ 374 million a year ago. Negative items included a much larger allowance for future loan losses, at $ 903 million for the first quarter from $ 282 million a year ago.
Auto loan and rental originations were $ 9.1 billion for the quarter, up from $ 9.2 billion a year ago.
LaClair says auto financing activity fell dramatically in late March. “The reduction in dealer activity reduced the volume of requests and creations by more than 50% at the end of March, which we believe should continue in line with orders for shelters in place.” , she said.
Ally was one of the first to offer payment deferrals related to the pandemic. The lender announced the offers on March 18, before a wave of state governors issuing stay-at-home orders.
Today, many other auto lenders are also offering payment deferrals and lease extensions, due to high unemployment and the difficulty of trying to visit dealerships in person.
“We have been very proactive,” LaClair said of the deferral offer, adding that Ally “has emailed our customers and offered them the option of having more payment flexibility.” .
The biggest rush of customers asking for postponements occurred in the first two weeks after the offer, LaClair said.
“What we have seen is high and high speed in the first two weeks of launch, and in particular week one. Since then it has stabilized considerably, so we are seeing a very modest increase. over the past two days, and even over the past two weeks. “