Auto Loan Aggregators: TAM
There is no publicly available information regarding the market size for auto loan aggregators within the United States. However, we were able to estimate that the market size of auto loan aggregators/online brokers would be between $6.55 billion and $14.11 billion if we were to take into that between 13% and 28% of US auto loan consumers secured their lending online
THE AUTO LOAN AGGREGATOR MARKET
- Economic analysts and research organizations have assessed the auto loan market as a whole within the U.S. and calculated the market share for the different lender types, including banks, captives, credit unions, finance companies and 'Buy Here, Pay Here' type businesses (BHPH).
- As auto loan aggregators are a relatively new lender type, their presence is yet to be quantified by leading financial organizations and economic researchers. This is inherently difficult to do given the business model of aggregators, who typically offer products from a variety of different organizations and traditional lenders, essentially acting as brokers rather than lenders. As a consequence, an auto loans aggregator could, in theory, contribute to market share for any of the lender types detailed above.
- This provides the possibility that auto loans aggregators have the potential to overtake the whole auto loan market, which as of 2019 had over $1.22 trillion in loan holdings, generating over $47.2 billion in revenue in 2016 or $50.4 billion adjusted for inflation in 2020 (industry growth notwithstanding).
- This would be unrealistic, however, given that in 2019 only 13% of US auto loan consumers secured their lendings online, even though 28% of consumers indicated that they prefer securing their auto loans online.
- If we were to use those figures as the potential market for auto loan aggregators/online brokers, we could estimate that the market size would be between $6.55 billion and $14.11 billion (13%-28% * 50.4 billion). Using these percentages, we could also estimate that the online loan holdings for auto loan aggregators will amount to $158.6 — $341.6 billion (13%-28% * 1.22 trillion).
- The estimated annual market size does not consider the commercial terms dictating fees or revenue split between auto loan aggregators and their partners. It represents the potential revenue generated via aggregator channels.
- 63% of consumers applied for their current auto loans through the dealership. However, innovations and partnerships with dealerships as well as the in-dealership presence could extend the available customer base.
We began our research by going through reputable financial news databases such as the Financial Times, Markets and Markets, Business Insider, and Forbes in order to locate the market size of the US auto loan aggregator market. While there were several reports that addressed the specific area of interest, they were paywalled. We then widened our search to the auto loan industry in hopes of finding information on the share of the online loan brokers. We located a report by Experian that provided a concise breakdown of the US auto loan industry by lender type but it still did not provide information about the aggregator sector. We also found the recent market size for the whole auto loan industry and a credible marker for the percentage of the market accessible to aggregators. These figures were then used to extrapolate a potential market size.
An effort was made to correlate the insurance aggregator market share with the auto loan sector, however, this proved difficult because of the differing statistics and market forces that influence both markets.