Articles
05.15.2025
Private Credit and the Auto Opportunity — Part I: Why the Market Is Paying Attention
Private credit is quickly becoming one of the defining financial stories of our time. Once a niche strategy reserved for opportunistic lenders and distressed funds, it’s now a $1.7 trillion asset class with no signs of slowing down. Rising interest rates, tighter bank regulations, and a global search for yield have pushed institutional and retail investors alike into private markets — and increasingly, into credit.
Traditionally, private credit has been concentrated in corporate lending and real estate. But in 2024 and heading into 2025, the lens is widening. One sector that’s beginning to draw serious attention: auto finance.
Why auto? Because it combines three things private credit loves: size, fragmentation, and inefficiency.
Auto lending — especially in the near-prime and subprime segments — remains a massive, distributed market. Independent dealerships across the U.S. originate billions in loans annually, often brokered through a complex patchwork of indirect lenders, regional banks, and finance companies. While this ecosystem works, it’s far from optimized — and more importantly, it's historically lacked consistent access to institutional capital.
Private credit funds now see an opening.
Instead of just passively purchasing asset-backed securities or participating in warehouse lines, many funds are looking to actively shape their exposure. That means acquiring loans directly, embedding into origination platforms, or backing dealership loan programs themselves. In short: moving closer to the metal.
This shift marks a clear evolution. It’s no longer just about capturing yield — it’s about control, data, and visibility. Investors want to see where their money is going, how credit is being underwritten, and how performance is being measured in real time.
At the same time, the infrastructure supporting auto lending is evolving. Legacy systems are being replaced by platforms that offer integrated origination, underwriting, and servicing tools — not just for dealerships and lenders, but for capital providers. This digitization is critical for private credit to operate at scale in this space.
It also reflects a broader change in mindset: The future of private credit isn't just in spreadsheets and structures. It’s in software and rails.
What’s Next? In Part II, we’ll explore the technology making this shift possible — including the platforms, APIs, and tools that are giving private credit funds real-time access to the auto loan market.
Articles
Private Credit and the Auto Opportunity — Part I: Why the Market Is Paying Attention
05.15.2025
Private credit is quickly becoming one of the defining financial stories of our time. Once a niche strategy reserved for opportunistic lenders and distressed funds, it’s now a $1.7 trillion asset class with no signs of slowing down. Rising interest rates, tighter bank regulations, and a global search for yield have pushed institutional and retail investors alike into private markets — and increasingly, into credit.
Traditionally, private credit has been concentrated in corporate lending and real estate. But in 2024 and heading into 2025, the lens is widening. One sector that’s beginning to draw serious attention: auto finance.
Why auto? Because it combines three things private credit loves: size, fragmentation, and inefficiency.
Auto lending — especially in the near-prime and subprime segments — remains a massive, distributed market. Independent dealerships across the U.S. originate billions in loans annually, often brokered through a complex patchwork of indirect lenders, regional banks, and finance companies. While this ecosystem works, it’s far from optimized — and more importantly, it's historically lacked consistent access to institutional capital.
Private credit funds now see an opening.
Instead of just passively purchasing asset-backed securities or participating in warehouse lines, many funds are looking to actively shape their exposure. That means acquiring loans directly, embedding into origination platforms, or backing dealership loan programs themselves. In short: moving closer to the metal.
This shift marks a clear evolution. It’s no longer just about capturing yield — it’s about control, data, and visibility. Investors want to see where their money is going, how credit is being underwritten, and how performance is being measured in real time.
At the same time, the infrastructure supporting auto lending is evolving. Legacy systems are being replaced by platforms that offer integrated origination, underwriting, and servicing tools — not just for dealerships and lenders, but for capital providers. This digitization is critical for private credit to operate at scale in this space.
It also reflects a broader change in mindset: The future of private credit isn't just in spreadsheets and structures. It’s in software and rails.
What’s Next? In Part II, we’ll explore the technology making this shift possible — including the platforms, APIs, and tools that are giving private credit funds real-time access to the auto loan market.