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Avant Expands into Auto Lending with New Refinance Product

The online consumer lender Avant is expanding into auto lending.

Chicago-based Avant said Monday that it has started offering to refinance car owners' loans. The firm also plans to begin financing purchases of new and used vehicles later in 2016.

Avant did not say in its press release whether it will target subprime borrowers. But in its unsecured personal loan business, the company focuses on consumers with lower average credit scores than competitors such as Lending Club and Prosper Marketplace.

The announcement comes at a time when late payments in the subprime auto lending business are on the rise. Last month the 60-day delinquency rate on Fitch Ratings' index of securitized subprime auto loans hit its highest level in 20 years.

Avant is offering a cash-out refinancing option for qualified borrowers. The company is also marketing its auto loan refinance product as a way for consumers to lower their monthly car payments. Smaller monthly payments could be the byproduct of either a lower interest rate or a longer loan term.

The entire auto finance industry has been moving toward longer terms as a way to make borrowers' monthly payments more affordable. That trend worries some observers, since it means that lenders need to resell repossessed vehicles at comparatively higher prices in order to avoid taking a loss.

Avant is currently offering to refinance car loans only in California. The company said it expects a national rollout of the refinance product by the third quarter.

Since its founding in late 2012, Avant has originated more than $3 billion in loans in the U.S., Canada and the United Kingdom.




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