securitization in auto finance

Securitization in auto finance is a process where lenders bundle a large number of car loans they have issued into a single financial product called a security. This security is then sold to investors, allowing lenders to free up money to issue more loans. Essentially, the auto loans serve as collateral that backs these securities, providing investors with a stream of payments from borrowers’ loan repayments. This helps lenders manage risk, access funding, and continue offering auto loans more efficiently.