Gaps in data verification likely contributed to missed double-pledging of assets at Tricolor Auto, prompting changes at rating agencies, Larry Chiavaro, president at his consulting company LC Advisors Group, told Auto Finance News during a special recording of the Weekly Wrap podcast.  

Chiavaro also served as executive vice president and co-founder of First Associates Loan Servicing from 2010 to 2021. That company was rebranded as Vervent in 2020. The backup servicer took over Tricolor’s portfolio following the company’s Sept. 10 bankruptcy filing.  

Tricolor is under investigation for allegations of fraudulently double-pledging assets to warehouse lines, with former Tricolor Chief Executive Daniel Chu and other former Tricolor executives facing a federal indictment alleging they committed fraud at the company.  

The Tricolor bankruptcy served as a “wake-up call for the industry” and has spurred changes, Chiavaro tells AFN.

In this special episode of the Weekly Wrap, Auto Finance News Founder and CEO JJ Hornblass joins Chiavaro to discuss the collapse of Tricolor Auto, backup servicing operations and risk management.  

Auto dealers are expecting a strong tax season to spur a sales jolt early this year, but lenders and dealers are split on their full-year outlook amid rising vehicle prices and macroeconomic challenges facing consumers.  

Other factors that market participants are monitoring include how fluctuating interest rates and unemployment will affect consumer affordability and car sales. 

In fact, December 2025 sales were projected to fall 3.5% year over year to 1.4 million, according to Cox Automotive. Those figures will be released later this month. 

However, 2025 new-vehicle sales reached the best level in six years, according to a Cox Auto Dec. 17 report. Full-year sales were projected to increase 1.8% in 2025 compared with 2024, according to Kelley Blue Book estimates.  

At the same time, credit access improved in 2025 as fewer banks reported tightening their lending standards. The auto loan rejection rate, however, climbed 1 percentage point YoY in October 2025 to 15.2%. 

Still, retailers such as Tempe, Ariz.-based DriveTime are eyeing growth in 2026 as they navigate the changing auto landscape. Chief Executive Mary Leigh Phillips told Auto Finance News that DriveTime is eyeing double-digit growth across its subsidiaries. 

Tricolor effects 

Among the changes the auto industry will navigate in 2026 are the effects of Tricolor Auto’s collapse, which is still playing out in court. At today’s court hearing, backup servicer Vervent’s responsibilities were outlined and permission was granted for Vervent to use Tricolor funds to pay collateral insurance protection and Texas seller-finance sales taxes.   

Read AFN’s top 5 Tricolor stories in 2025.  

Listen as Auto Finance News Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush unpack recent auto finance news and provide a look at the year ahead.  

Subscribe to “The Roadmap Podcast” on iTunes or Spotify or download the episode.   

An uptick in repossessions, continued affordability challenges and weakened credit performance are top of mind for lenders headed into 2026.  

The shutdown of several lenders this year combined with inflationary pressures is likely to contribute to more repossessions at the end of 2025 and in early 2026. By Dec. 31, repossession assignments nationally are projected to surpass 10.5 million units for the year, according to American Recovery Association data.  

At the same time, credit performance continued to worsen across securitized nonprime auto loans in November while prime loans had some deterioration. This bifurcation in credit tier performance is expected to continue next year.  

Car sales have also been challenged as consumers face high sticker prices and shift to used vehicles, creating more competition in the market. CarMax’s used-vehicle sales fell 8% year over year in its fiscal third quarter to 169,557 units, while CarMax Auto Finance’s originations declined 9.3% YoY to $1.8 billion.  

Meanwhile, Auto Finance News is pleased to name Sanjiv Yajnik, president of financial services at Capital One, the 2025 Auto Finance Executive of the Year.  

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across sales, affordability and credit performance for the week ended Dec. 19.

New identification requirements for vehicle registrations in Texas have prompted concerns from dealers and lenders about a potential increase in unregistered or uninsured cars on the road. 

The Texas Department of Motor Vehicles in a Nov. 19 bulletin clarified that documentation required to register vehicles or renew registrations cannot include expired IDs and that passports issued by a foreign country must include documentation proving lawful admission to the U.S. The changes could hamper vehicle sales and lead to an uptick in illegally operated cars, creating collateral risk for auto lenders. 

In the wider market, credit access improved in November even as average transaction prices rose. The Dealertrack Credit Availability Index increased 4% year over year to 99.1 as approval rates, subprime share and the share of longer-term loans rose. The new-vehicle ATP ticked up 1.3% YoY to $49,814, while incentives as a percentage of ATP was 6.7%, down from 7.9% of ATP a year ago.  

High prices are prompting consumers to shift to used vehicles, with banks such as Huntington seeing the mix of originations also shift away from new cars.  

Meanwhile, auto loan delinquency rates are projected to increase next year but the overall rate of growth is expected to slow. Auto loan delinquencies of 60-plus days are forecast to land at 1.54% in Q4 2026, up 3 basis points compared with the Q4 2025 projected rate, according to TransUnion. However, the percentage change YoY is expected to be 1.4% in Q4 2026, down from 2.6% forecasted in Q4 2025. 

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across compliance, affordability and credit performance for the week ended Dec. 12. 

Electric vehicle sales declined at most major manufacturers in November on the heels of an uptick in EV share of total new-car sales in the third quarter, due in large part to a pull-ahead of purchases before the federal EV tax credit expired.  

Automakers including American Honda, Ford Motor, Hyundai, Subaru and Toyota reported double-digit year over year declines in EV sales during the month, while overall sales were mixed. EV sales slowed in November but in Q3 benefited from consumers wanting to take advantage of the federal tax credit of up to $7,500 before Sept. 30, contributing to a jump in new-vehicle EV financing share to 11.4%. 

A strong tax refund season is projected to boost car sales in early 2026 as some consumers lean into the used-car market due to affordability concerns. Used-vehicle values were flat YoY and up 1.2% month over month in November, according to the latest Manheim index. 

In powersports, sales were mixed for the most recent quarter. Canadian powersports manufacturer Bombardier Recreational Products’ North American retail sales declined 4% YoY in its fiscal third quarter ended Oct. 31. RV manufacturer Thor Industries’ net sales, however, jumped 11.5% YoY in its fiscal first quarter ended Oct. 31. 

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across vehicle sales, pricing, consumer sentiment and powersports for the week ended Dec. 5. 

This episode is sponsored by The Work Number by Equifax.
 

Bankrupt subprime retailer Tricolor’s 10,000 remaining vehicles may be sold by March 2026 if trustee Anne Burns’ motion is approved.

Tricolor backup servicer Vervent and vehicle management company Holman will sell all remaining vehicles, if the motion is approved by Judge Michelle Larson. This includes vehicles that may belong to Tricolor’s creditors, through third-party auctioneers, according to court documents.

The proposal came ahead of former Tricolor Chief Executive Daniel Chu’s motion seeking to shore up $15 million in legal defense funds, according to U.S. Bankruptcy Court of the Northern District of Texas Dallas Division court documents. The funds are from insurance payments made by Tricolor before it went bankrupt, according to the documents.

Across the subprime auto industry, credit health is declining. Early-stage delinquencies across nonprime securitized auto loans rose 88 basis points year over year and the rate of nonprime securitized loans more than 60 days past due rose 65 basis points YoY in October, according to Kroll Bond Rating Agency’s auto loan asset-backed securitization index.

Meanwhile, new-vehicle sales were down in five of the 12 regions covered by Federal Reserve banks, according to the most recent edition of the Fed’s Beige Book. New-vehicle sales were weighed down by declining consumer demand and EV sales.

Automakers offered low APR options and cash-back incentives for Black Friday to stay competitive on rates while balancing affordability concerns. Dealers also expect a short-term dip in wholesale used-vehicle inventory through December as fleet management companies hold onto cars longer.

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush discuss trends across the subprime auto market, vehicle incentives and Tricolor’s Chapter 7 bankruptcy for the week ended Nov. 28.

Last week brought more shakeups in the auto finance industry as lender Flagship Credit Acceptance announced it was finalizing a sale of the company to an investment firm, while Prestige Financial Services stopped originations.  

Chadds Ford, Pa.-based Flagship announced on Nov. 21 that it had entered into an agreement to sell the business to New York-based InterVest and would be rebranded to Flagship Financial Group, according to a company release. Once the transaction is closed, Jim Landy will become chief executive.  

Prestige Financial Services also informed dealerships that it was stopping originations as of Nov. 20, according to an email obtained by Auto Finance News.  

Draper, Utah-based Prestige will continue to service its loans and fund contracts received before Nov. 20, according to the email.  

Prestige also reportedly laid off an undisclosed number of employees this month, AFN reported.  

Meanwhile, Tricolor representatives were no-shows at the Section 341 Meeting of Creditors on Nov. 18, which was attended by 150 people.  

The lack of representation was unusual and raised questions about why no one appeared on Tricolor’s behalf.  

In other news, AFN is pleased to recognize 10 auto finance executives to watch in 2026. These leaders have produced noticeable results in their respective organizations in 2025 and are heading transformative strategies into next year.  

Listen as Auto Finance News Editor Amanda Harris, Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush unpack the past week’s auto finance. 

The compliance industry continues to face headwinds as funding for the Consumer Financial Protection Bureau is in jeopardy after the Department of Justice recently ruled that the bureau cannot request money from the Federal Reserve. 
The DOJ’s Nov. 7 ruling states that the “combine earnings of the Federal Reserve system” — laid out by the Dodd-Frank Act as the source of most of the CFPB’s funding — refers to Fed profits. The Fed was last profitable in 2022. 
It is unclear if the CFPB will be operational in January 2026. The bureau can request funding from Congress, but approval is uncertain.
Government shutdown ends
The ruling on CFPB funding came just days before the U.S. House voted Nov. 12 to end the longest government shutdown in United States history. 
The end of shutdown, which stretched from Oct. 1 to Nov. 12, could prove fruitful for the auto industry because consumers may have delayed auto purchases during this time, experts say. The theory, in part, is evidenced by a 2.7% drop in consumer confidence in October and slowing new-car sales.
Despite industry pressures, auto industry participants continue to see resilience. 
Shifts in RV industry
The RV industry also is optimistic for 2026, even as it continues to grapple with ongoing challenges such as falling registrations. 
Industry leaders gathered in Las Vegas this month for RV Dealers Convention and Expo 2025 to discuss the effects of macroeconomic conditions, consumer sales trends and the ROI for AI integration.
Listen as Auto Finance News Senior Associate Editor Truth Headlam and Associate Editor Aidan Bush unpack the past week’s auto finance and powersports news.  

Auto retailers and fintechs mostly reported growth in the third quarter amid mixed October retail sales, flat vehicle values and some layoffs. 

CarMax named David McCreight as its interim president and CEO, replacing Bill Nash, effective Dec. 1. Nash is not retiring, and the shakeup comes as the Richmond, Va.-based retailer’s comparable store used-vehicle retail sales are expected to drop between 8% and 12% year over year in the third quarter of its fiscal 2026, according to CarMax’s Nov. 6 release. 

Meanwhile, EV makers Lucid Motors and Rivian saw deliveries jump 46.6% YoY and 31.8% YoY, respectively, in the third quarter ended Sept. 30. 

AI-powered lending platform Upstart also saw growth in Q3, with auto loan originations up 357.1% YoY on issuance of 6,705 loans, according to a Nov. 4 Upstart presentation.  

However, fintech Open Lending saw certified loan volume drop 13% YoY to 23,880, according to its Nov. 6 release. The fall came as Open Lending prepares to roll out a new credit decisioning platform. 

Vroom subsidiary United Auto Credit Corp. also originated $107 million in the third quarter ended Sept. 30, up 7% year over year but down 6.1% quarter over quarter. 

The mostly positive Q3 reports came as auto lenders tightened their credit standards. The average new-vehicle auto loan rate increased 19 basis points month over month in October to 9.6%, according to Cox Automotive. This rise is despite a 25-basis-point cut by the Federal Reserve on Oct. 29. 

Meanwhile, lender Prestige Financial Services reportedly laid off employees in early November, according to posts from former employees. The reported layoffs come as the subprime market faces challenges in affordability and credit performance. 

With these headwinds and elimination of the federal EV tax credit, automakers reported mixed sales in October. Toyota Motor North America saw sales surge 11.8% YoY to 207,910 vehicles, while Mazda’s sales plummeted 32.6% YoY to 25,161 vehicles, according to the companies. 

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris discusses trends across third-quarter earnings, vehicle values and sales for the week ended Nov. 7. 

Auto lenders are homing in on key areas of underwriting to manage risk and grow in 2026 as the subprime market continues to face challenges with credit performance and affordability.

Improved loan decisioning, declining interest rates, the use of data and analytics, and responsible growth are top of mind for auto lenders into next year, leaders said at the recent Auto Finance Summit 2025.

The Federal Reserve cut its benchmark interest rate by another 25 basis points (bps) on Oct. 29, prompting lenders to prepare for an uptick in refinance opportunities. However, affordability remains a leading concern, especially for subprime consumers.

In fact, Irvine, Calif.-based subprime auto lender Bayside Credit stopped originating auto loans against the backdrop of challenging macroeconomic conditions.

Subprime credit performance is also a concern in the auto securitization market, with  and lenders that target consumers who may not be legal U.S. citizens experiencing higher-than-expected losses.

In other news, subprime lender Credit Acceptance Corp.’s originations fell 16.5% year over year in the third quarter amid competition and worsening loan performance.

Carvana, on the other hand, posted a 58.8% YoY jump in originations in Q3 and increased its forward-flow agreement with Ally Financial.

In this episode of “Weekly Wrap,” Auto Finance News Associate Editor Aidan Bush discusses trends across underwriting, subprime lending, capital markets and third-quarter earnings for the week ended Oct. 31.