Automotive manufacturers are known to use deadline-based convex incentives to motivate dealerships to sell new cars. This paper shows that dealerships respond to these incentive targets by pushing customers from used to new cars as the end of the month approaches, and that subprime loans written...

We examine the impact of consumer protection laws on loan terms and outcomes in auto financing. We find that dealers strategically adjust contracts such that similar borrowers face the same monthly payments in states with and without interest rate limits. However, monthly payments are higher in...

Using a randomized experiment in the auto lending industry, we provide causal evidence of higher loan profitability and lower default rates with algorithmic machine underwriting, relative to human underwriting. We find that machine-underwritten loans generate 10.2% higher profit than...

We study the relative importance of asset-backed lending (ABL) and cash flow-based lending (CFBL) in auto finance. We find that negative durability shocks generated by vehicle discontinuations lead to increased loan-to-value ratios and down payments. These results are consistent with an ABL+CFBL...