Obviously, operators need financial resources to run their dealerships. Capital providers do, too.
And NextGear Capital announced on Thursday that it has more resources to help independent and buy-here, pay-here dealerships.
The Cox Automotive division said it completed the renewal of its $1.1 billion financing facility on Aug. 31. In addition, NextGear mentioned it recently closed its latest $500 million bond offering from July.
Executives highlighted that NextGear’s renewed $1.1 billion line of credit with banks can provide a variable funding mechanism to support the seasonal and growth needs of its dealer clients.
Company leaders pointed out that the bond offering is NextGearl’s 13th asset-backed security (ABS) issuance since its initial offering in 2014.
“These recent transactions preserve our operating flexibility while allowing us to continue serving the floor plan financing needs of independent dealers,” NextGear chief financial officer Dave Horan said in a news release.
“Our 20,000-plus dealer clients can gain greater confidence that their lender is well established in the capital markets and has a reliable source of capital to fund their inventory needs today and in the future,” Horan continued.
This $500 million bond offering was the first for NextGear since March 2020 and represents the first floor plan ABS transaction issued so far this year.
According to the news release, MUFG Securities Americas served as administrative agent on the bank conduit facility, and RBC Capital Markets was the lead structuring agent and underwriter for the securitized term note offering.
Agora Data already worked with buy-here, pay-here dealerships to help them get the capital they need to acquire inventory.
Now the company has a new offering to assist BHPH operators have improved facilities to display and turn those vehicles.
On Monday, Agora Data launched AgoraPoint, which offers financing for commercial real estate and facilities. The company described its action as another step to providing a “holistic, one-stop” funding solution for dealers.
“AgoraCapital provides more capital capacity than traditional lenders and enables BHPH dealers to grow their portfolio to two, three or four times their current size,” Agora Data chief executive officer Steve Burke said in a news release. “Many dealers need to open new locations to handle that growth and Agora wants to make that funding easy for the dealer through AgoraPoint.”
The company reiterated that offering a new funding source for dealers to efficiently and effectively obtain capital to grow their footprint reinforces Agora’s commitment to make available to the BHPH industry innovation and resources to fuel business.
Members that connect their portfolios to the Agora platform can start to realize the benefits of Agora’s proprietary modeling that outlines their business potential and the keys to maximize growth.
Which then triggers the potential to expand an existing lot or add more locations
“When I talk to a dealer and let them know they qualify for $20 million in capital when their current lender has them capped at $5 million, the dealer asks how they can use the $20 million with only one car lot. AgoraPoint helps make the purchase of more lots possible,” Agora senior vice president of sales Chris Barry said.
AgoraPoint is the latest product added to Agora’s family of products all powered by artificial intelligence and machine learning.
“Agora is dedicated to enabling BHPH dealers and small to mid-tier finance companies grow safely and have available abundant and affordable capital,” the company said, while adding that more details are available by visiting agoradata.com or calling (877) 592-4672.
Agora Data chief executive officer Steve Burke returned for another podcast appearance to discuss two of his passions: buy-here, pay-here dealerships and helping them get the capital they need to be successful.
The conversation came after the company rolled out its latest credit offering and found a way for BHPH operators to tap into the securitization market.
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Without financial resources, buy-here, pay-here dealerships likely wouldn’t exist since it’s such a high-risk, cash-dependent piece of the automotive industry.
And for the second time in the past couple of months, Agora Data added to its suite of market-disruptive capabilities to address that critical ingredient to operator success.
This week, the firm announced the rollout of its newest tool — AgoraCredit — what the company described as a dealer-friendly line of credit to continue helping an underserved segment.
With AgoraCredit, the company explained BHPH dealers and other underbanked originators can transition from their current senior lender into interim credit lines that are designed to transition into a highly efficient and abundant source of permanent capital — AgoraCapital.
AgoraCredit was created with the specific goal of not locking originators into expensive and risky lines of credit, but instead with the objective of providing a smooth path into Agora Data’s crowdsourced securitization.
Previously, Agora Data announced the successful closing of what the firm believed to be the first-ever crowdsourced auto securitization; a development that came to fruition on Dec. 29.
Fueled by artificial intelligence and machine learning, Agora Data aggregated numerous originators with portfolios ranging in size from $11,000 to more than $20 million into a single capital markets securitization.
Agora Data chief executive officer Steve Burke explained that securitization gave BHPH operators and subprime originators of all sizes access to the capital markets with lower cost of funds and other business transformation benefits.
Now, Burke indicated AgoraCredit works in partnership with AgoraCapital rather than in competition with it. Burke noted it also removes barriers for dealers and small to mid-size finance companies to graduate directly into this new source of funding that he said has never been available to the auto industry.
“Closing the first crowdsourced securitization at the end of 2020 was a monumental achievement for the auto industry. We showed proof of concept for a business model that brings favorable financing terms to an underserved group of entrepreneurs,” Burke said in a new release about the latest progress of the company founded in 2017.
“With AgoraCredit, we made another addition to our suite of already game-changing capabilities. AgoraCredit will make the process even easier for more dealers and finance companies to access capital,” he continued.
Pioneered by Agora Data, both AgoraCapital and AgoraCredit look to provide a new funding channel to obtain all the cash needed to fuel growth. Agora’s AI-infused technology can connect dealers and finance companies with the capital markets.
For capital markets stakeholders, AgoraTrade and AgoraCapital can offer an opportunity to participate in a time-tested asset class previously not available. Agora Data made history with the closing of the first-ever Crowdsourced Subprime Auto Securitization on Dec. 29.
For more information, contact Agora Data by visiting agoradata.com or calling 877-592-4672.
A financial services organization already with a long-standing relationship with NIADA recently expanded the partnership.
Home Loan Investment Bank, whose auto finance division offers a Preferred Dealer Referral Program to independent dealers throughout the country, has joined with the National Independent Automobile Dealers Association as its newest Bronze-level National Corporate Partner.
“Home Loan works with dealers to offer car buyers a unique value proposition: financing for any make, any mileage, any year,” Home Loan Investment Bank chairman and chief executive Brian Murphy said. “In addition to automobiles, we finance motorcycles, recreational vehicles and commercial vehicles. We offer loans for new and used vehicles as well as refinancing.
“We are excited about this opportunity to get to know NIADA’s member dealers and show them how a bank named Home Loan can help them sell more cars,” Murphy continued.
NIADA senior vice president of member services Scott Lilja said Home Loan’s 50-plus years of experience in the banking and lending business helps make the company a strong partner.
“Home Loan Investment Bank has developed very attractive lending solutions for our independent auto dealer members,” he said. “That helps address one of biggest challenges our members face — access to high quality, profitable, first-class service and auto lending resources.
“We look forward to helping Home Loan Investment Bank expand its presence in the independent auto retail market and bring best-in-class auto finance resources to our member dealers,” Lilja went on to say.
For more information, visit www.homeloanbank.com/auto.aspx or call (401) 773-9610.
NextGear Capital has rolled out its new Self Reconciliation feature nationally, available through the Account Portal. The company says the Self Reconciliation functionality simplifies the necessary floorplan auditing process.
In releasing the feature, NextGear noted it will help dealers who could be spending their time and energy focused on activities that benefit their customers and their bottom lines rather than managing ancillary tasks. The new feature can help address what NextGear says is a “major pain point” for dealers and that it can free up more of their time to spend on core business operations.
The Self Reconciliation functionality simplifies the floorplan auditing process with what NextGear describes as a “streamlined, mobile-first solution.” Dealers can log in to the NextGear Capital Account Portal through their mobile device, navigate to the My Audits tab, view vehicles to reconcile, and take photos to submit and clear outstanding audits in real-time.
“It’s a lot quicker, it’s simplified and it’s nice not trying to have to put a piece of paper out there on a windy day,” Geoff Gallup, manager at G5 Auto Sales in Fishers, Ind., said in a news release. “It’s down from a four-step process to a one-step process.”
Self Reconciliation combined with the Account Portal My Audits tab, provides information to dealers and allows them to take action from their computers, smart phones or tablets. Dealers can see a timeline of transactions and associated fee transparency, clear units in real-time, and view a historical reference of units cleared.
“We know from talking with dealers that the auditing process has traditionally been a frustrating experience,” said Randy Dohse, NextGear Capital senior vice president of operations. “The national roll-out of Self Reconciliation gives independent dealers across the U.S. a new convenient way to handle audits, saving time and reducing errors. They can use their mobile phone to capture and reconcile audits on the spot, and move onto the business of selling cars.”
Along with Self Reconciliation capabilities, other improvements to the auditing process have substantially decreased business interruptions by up to 80 percent, according to the company. Streamlined notifications, extended reconciliation timelines, and the ability to advise on out-of-office periods are a few changes implemented to help dealers efficiently manage their floorplan account.
NextGear Capital, a Cox Automotive brand, worked recently to streamline the entire auditing process translated into efficiencies for Wholesale Inc. in Nashville, Tenn. “This saves three people two weeks of time following up on units,” said Chad Cunningham, vice president of Wholesale Inc.
Automotive Finance Corp. president Jim Money shared a conversation with Nick during Used Car Week 2018 to discuss trends involving dealership floor planning and other commercial lending that helps stores thrive.
Money also touched on how actions by the Federal Reserve influence how both AFC and dealerships do business.
The podcast discussion can be found below.
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Dealerships are leveraging NextGear Capital for more than just inventory they want running down the auction lanes.
The Cox Automotive company recently highlighted that it has financed more than $1 billion through the first three quarters of the year for non-auction purchases via its funding feature, Rapid Pay.
NextGear Capital insisted the adoption of this feature reflects dealers’ growing use of digital technology to maintain cash flow and enhance business operations.
NextGear Capital introduced Rapid Pay two years ago to streamline the flooring process for vehicles purchased outside the auction, such as customer trade-ins and owned inventory. Since then, the company stressed that it has proven to be the simplest way for clients to secure funds quickly.
“Rapid Pay enhances dealers’ ability to assemble inventory desired by customers without holding costs eating into their profits,” said Sarah Lutey, director of corporate strategy for NextGear Capital. “This online process is just one more way we can help our clients manage and grow their operations.”
In addition to Rapid Pay’s 2018 milestone level of inventory financing, NextGear Capital data revealed more than 70 percent of its clients used the feature at least once, while 58 percent used it to floor half or more of their non-auction purchases.
In fact, the company added that the feature has proved so easy to use that 39 percent of NextGear Capital dealers used it to floor all of their vehicles purchased outside of the auction.
The company reiterated the main capabilities of Rapid Pay, including:
— Faster funding for non-auction purchases: Prioritized Rapid Pay and expedited funding requests can enable dealers to accelerate the non-auction flooring process. Requests are independently initiated through a dealer’s account portal, accessible via computer or mobile device, and don’t require a representative to complete. Once approved, funds are promptly deposited through ACH into a dealer’s account.
— Simple title management: A pre-paid FedEx waybill (provided by NextGear Capital at no cost) to submit title for a non-auction purchases floored through Rapid Pay.
— Additional visibility: A client can immediately view the status of a non-auction vehicle funding request after it is submitted through Rapid Pay.
“The adage ‘time is money’ is more relevant than ever for dealers,” Lutey added.
For more information about Rapid Pay, go to this website.
This week, Equifax and the National Independent Automobile Dealers Association shared noteworthy results from their Q3 Auto Business Outlook, which stems from operators participating in a quarterly survey.
Equifax and NIADA highlighted that three general themes surfaced from the latest edition. Those elements included:
— Independent dealers remain optimistic heading into 2019.
— The buy-here, pay-here market shows growth.
— A continued shift is happening from new-vehicle sales and leases to used-car transactions.
Officials shared results from specific survey questions, including:
Overall, does your dealership expect economic conditions to improve, stay the same, or decline in the auto industry over the next quarter?
2018 Q3: 47 percent said they would improve
2017 Q3: 36 percent said they would improve
Does your dealership plan to expand its business over the next quarter? (add new equipment, enhance your building/property)
2018 Q3: 32 percent of dealers said yes
2017 Q3: 30 percent of dealers said yes
What percentage of the following categories makes up your total retail automobile sales?
2018 Q3: 37 percent in prime / 37 percent in BHPH / 26 percent in subprime
2017 Q3: 39 percent in prime / 33 percent in BHPH / 28 percent in subprime
Do you anticipate your dealership’s retail sales to grow, stay the same or decrease over the next quarter?
2018 Q3: 56 percent said they would grow, while 36 percent said the same and 8 percent suspect a decrease
2017 Q3: 55 percent said they would grow,while 34 percent said the same and 11 percent suspect a decrease
When it comes to factors contributing to more difficulty for dealers to secure loans for their customers, operators cited the following:
40 percent: tighter restrictions to qualify buyer loans (credit tiers)
25 percent: less access to number of lenders
25 percent: worsening terms affecting ability to effectively compete with franchised dealers
14 percent: more verification of buyers’ background (employment, income, residence address, etc.)
While 2016 was a record-setting year for new-car sales, Equifax pointed out that at the midway point of 2018, used-vehicle sales are continuing a shift that started last year and are on pace to match a strong 2017.
Analysts indicated the shift to used vehicles is also behind an increase in loans and a decline in the leasing market. Equifax noted that the nearly 2 million auto leases, totaling $32.4 billion, originated through the first half of 2018 reflects a 1.2-percent decrease in accounts and a 2.9-percent decrease in balances from the same period last year.
Equifax added that new-model leases accounted for only 13.8 percent of all auto accounts originated through June and 10.4 percent of balances.
Gunnar Blix, deputy chief economist for Equifax, explained that despite a pace of new sales that is slightly off the record-setting mark of 2016, car shoppers overall are financing more — a clear reflection of the continued increase in the price of cars and trucks and the starting impact of rising interest rates.
“We see the shift from new-vehicle sales activity to more used vehicles continuing, largely because the shopper knows the price of autos is going up, and they realize they can find bargains on slightly used, off-lease vehicles that are readily available,” Blix said. “Interest-free loan and lease incentives are also becoming few and far between.”
AGORA founder and chief executive officer Steve Burke is building a robust collection of integrations where his platform for bulk portfolio transactions can function with dealer management software (DMS).
With Frazer and DealerCenter already in his pocket, Burke recently announced AGORA now has a joint newly launched integration functionality relationship with Wayne Reaves.
“Partnering with Wayne Reaves is a great honor and opportunity for both of our exceptional organizations,” Burke said. “The success and protection of our dealer customers is a shared mission for AGORA and Wayne Reaves, who are aligned to help dealers with loan portfolios; sell faster, sell more profitably and sell securely.”
As one of AGORA’s key integration partners, Wayne Reaves’ dealers can seamlessly and securely offer their loans for sale to the 60-plus banks, finance companies and credit unions on the AGORA platform, avoiding unsafe emails and data files
“Data files have been eliminated by the Wayne Reaves integration and dealers now have more liquidity than ever before,” Burke added.
Wayne Reaves became a licensed Georgia dealer in 1973 and has been involved in the independent automobile dealer business ever since. In 1987, Reaves began providing software to dealers for not only buy-here, pay-here, but also bank financing, wholesale, cash and lease transactions.
Wayne Reaves Software is now a leading provider of dealer management software and websites to independent dealers. The company now serves more than 5,000 dealers across 24 states.
And now the company has a relationship with AGORA.
“AGORA is the best way to offer your buy here pay here portfolio to many lenders at one time, ensuring the best possible offer is received. This will allow quicker transactions, more money and less hassle for the dealership using Wayne Reaves Software,” Wayne Reaves business relations director Bob Higgins said.
Visit www.agoradata.com for more information.
