April 2025
With the rollout of Trump’s proposed tariffs, the U.S. economy is bracing for another wave of inflationary pressure. Designed to bolster domestic manufacturing and reduce foreign dependence, these sweeping tariffs will have immediate, tangible effects on both consumers and businesses.
Americans already grappling with elevated interest rates and persistent inflation will feel the effects quickly as prices rise across a broad range of imported goods, including vehicles, electronics, and household essentials. As costs climb, consumer behavior will shift. The businesses best positioned to adapt will be those that move quickly and thoughtfully.
Adapting to the Consumer Response
As imported goods become more expensive, consumers are likely to respond with caution. Discretionary spending will slow, and larger financial commitments such as loans or financed purchases will be approached with greater hesitation. Across the lending landscape, from retail credit to personal loans and vehicle financing, this shift will likely lead to a slowdown in originations and increased complexity in servicing.
Auto finance lenders may feel this pressure more acutely. Higher vehicle prices will make loans less accessible, particularly for subprime borrowers. Delinquency risk is expected to rise, and more consumers will likely explore refinancing options or request payment relief as household budgets tighten. Even before a loan is finalized, lenders should be prepared for a surge in pre-purchase inquiries, as buyers look for greater clarity and confidence before making long-term financial commitments.
At the same time, new vehicle prices affected by tariffs may push more buyers toward the pre-owned market. As demand for used vehicles increases, loan originations in that segment could see growth, particularly from budget-conscious consumers looking for greater value and flexibility. Lenders who adjust to this shift in consumer demand will be well-positioned to support growth in the used vehicle segment.
Meeting the Moment with Agility
For lenders and loan servicers, this environment calls for more than reactive measures. It requires a shift in how they support borrowers, manage risk, and maintain performance. As consumers grow more cautious and service needs increase, responsiveness, empathy, and efficiency will become essential to staying competitive.
Now is the time to build agility into core operations. Strengthening the onboarding process can set expectations early and reduce downstream issues. Support teams must be equipped to manage increased inquiry volumes as more consumers reach out with questions or seek flexible payment options.
In collections, timing and tone are critical. A thoughtful, respectful approach can help preserve customer relationships while protecting repayment rates. Those who adapt quickly and communicate clearly will be best positioned to navigate what comes next.
Turning Uncertainty Into Opportunity
The “Liberation Day tariffs” signify a new chapter in U.S. economic policy. The uncertainty they introduce presents a real challenge for lenders and loan servicers but also a chance to rethink how they connect with today’s more cautious, value-driven consumers.
Rising prices, selective borrowers, and increased demand for support will put pressure on teams throughout the loan lifecycle. Those who respond quickly, communicate clearly and show empathy will be best positioned to build trust and retain customers in the months ahead.
This is where KM² Solutions delivers meaningful value. By providing scalable, nearshore support across onboarding, servicing, and collections, we help clients stay responsive while managing cost and risk. In a moment that demands both efficiency and care, KM² delivers the operational flexibility and customer-first mindset needed to turn uncertainty into opportunity.
About KM² Solutions
KM² Solutions is an award-winning BPO with over two decades of experience operating an exclusively nearshore strategy throughout the Caribbean and Latin America. The company provides clients with a host of outsourcing solutions, including customer care, receivables management, technical support, sales & marketing, data analytics, and back-office processing. KM² Solutions maintains PCI DSS compliance, completes an annual SOC 2 audit, and has a Compliance Management System that aligns with the FDIC.
