Financing

Innovate Auto Finance secures $50M deal with asset management firm

FORT WORTH, Texas - 

Investment firms continue to push funds into the auto finance space.

Not long after defi SOLUTIONS landed $55 million, Innovate Auto Finance — a purchaser and servicer of automobile loan portfolios and provider of line-of-credit financing — said it has been retained by a multinational investment firm to source $50 million worth of subprime auto installment contract portfolios for the firm to review for purchase.

Executives highlighted Innovate will source, perform due diligence, underwrite, process and ultimately service all portfolios that the investment firm client chooses to acquire.

“We are excited to provide this full-service turnkey solution that leverages our near-decade of experience successfully acquiring subprime auto loan portfolios,” said Preston Miller, president and chief executive officer of Innovate Auto Finance.

“Now on our third generation, our highly predictive credit scorecard and pricing models are tremendous assets to assist investment firms wanting exposure in subprime auto finance,” Miller continued.

“In addition, our servicing and auto remarketing companies — Loan Portfolio Servicing (LPS) and Caprock Auto Remarketing — bring more than 10 years of positive results to ensure our clients maximize their profits from this investment,” Miller went on to say.

For more information about Innovate’s services, including the turnkey portfolio investment program, contact Scott France at scott.france@innovateauto.com or (817) 471-1182.

Ally pledges $750M to buy contracts from DriveTime

DETROIT - 

DriveTime might be still searching for a new chief executive officer, but the retailer that specializes in working with consumers with soft credit now has more resources for originations.

Ally Financial on Wednesday announced that it has entered into an agreement to purchase retail contracts from DriveTime.

Under the agreement, Ally will make up to $750 million available to DriveTime for the purchase of retail contracts over the coming year.

“We’re excited to work with DriveTime to provide committed financing that frees up capital it can use to grow its business,’’ said Tim Russi, president of auto finance at Ally.

“Our expertise allows us to support DriveTime in a way that complements our well-established indirect model,” Russi continued.

Under the terms of the agreement, Ally will provide committed financing for the purchase of retail contracts for 12 months. The agreement supports DriveTime’s expansion into the near prime segment.

“This relationship with Ally enables us to grow originations, diversify our retail and finance platforms and enter into a new consumer segment, while still maintaining the exceptional customer experience we take pride in delivering,’’ said Kurt Wood, chief financial officer of DriveTime.

“We appreciate Ally’s financing agility in implementing an innovative solution to meet our needs,” Wood added.

The relationship with Ally arrived about three weeks after DriveTime indicated that the company is currently searching for a CEO for its retail operations.

Top 10 used brands that financed buyers stretch most to afford

CHARLOTTE, N.C. - 

LendingTree released findings of its study on which brands buyers who secure financing are stretching the most to afford.

The company acknowledged financing a vehicle is one of the more significant financial decisions Americans make, and even those who try to save money by buying a used model can struggle to afford the monthly payments.

A recent LendingTree survey found that 27 percent of Americans plan to purchase a vehicle in 2018. To discover if consumers are more likely to stretch their available incomes to own certain brands, LendingTree looked at people who found available financing on the LendingTree.com platform in 2017 to buy used vehicles.

Contrary to popular assumptions, LendingTree found that the results revealed that people aren’t going broke to buy used luxury cars. In fact, buyers of the most expensive cars seem to handily afford them.

On the other hand, LendingTree found Buick owners have the hardest time affording their car payments — not because they’re indulging in particularly expensive vehicles, but because their income tends to be on the lower side, meaning they use a larger share of take home pay to cover their monthly payments.

The survey showed Buick and Chrysler owners who took out a contract to finance the purchase of a used vehicle in 2017 are spending an average of 10.9 percent of their monthly income to make $418 and $440 monthly payments, respectively.

That’s more than twice the percentage of income that Tesla and Porsche owners spend on their car payments.

LendingTree determined buyers aren’t paying an exorbitant amount for those cars, relative to the other buyers on the platform; Buick buyers spent an average of $18,597 on their vehicles, and Chrysler buyers slightly less with an average of $18,497, but their reported monthly earnings fall on the lower end of the group, and they get the least favorable contract terms.

After Buick, Cadillac is the luxury brand buyers stretch the most to own, according to the survey.

At 8.8 percent of their reported income, Cadillac owners are willing to spend the largest percentage of their monthly income among buyers of used luxury makes. They’re also willing to pay the healthy average price of about $25,294, which results in an average payment of $480.

Jump several places down the list to see other luxury cars, where several are clustered around 7.5 percent of monthly income. Jaguar, Infiniti, BMW and Mercedes-Benz owners paid about $27,734, $24,728, $25,038 and $28,792, respectively, which come to average monthly payments of $503, $454, $476 and $519, respectively.

LendingTree contends that buying used can save substantial money, but financing can be trickier.

“For most Americans, price and monthly payment are still significant deciding factors, as they are often searching for a vehicle to fit within a certain budget. Used cars offer a huge price advantage and are great for those who are less picky about having the most current features. But used cars often have fewer dealer incentives, such as low financing, to capture buyers,” said Mike Ouyang of LendingTree’s auto division.

LendingTree explained that survey orchestrators determined average estimated vehicle cost as the sum of self-reported down payment amounts and actual contract amounts averaged across all purchasers of that make. Average estimated monthly payment is the monthly payment of each buyer (calculated on amount borrowed, contract term, and interest rate) averaged across all purchasers of that make. Estimated monthly payment as a percentage of monthly income is the calculated monthly payment divided by borrower self-reported monthly income (data is available in ranges of $50, so the midpoint was used for this estimate), averaged across all purchasers of that make.

All of the survey details can be viewed at this website.

Car Makes Borrowers Stretch the Most to Buy Used

Rank

Make

Estimated Monthly Payment as a
Percent of Estimated Monthly Income

Average Estimated
Monthly Payment

Average Estimated
Vehicle Price

1

BUICK

10.9%

$418

$18,597

2

CHRYSLER

10.9%

$440

$18,497

3

NISSAN

10.6%

$405

$18,231

4

DODGE

10.6%

$454

$22,290

5

CHEVROLET

10.2%

$437

$20,930

6

KIA

9.7%

$368

$17,357

7

HONDA

9.4%

$389

$18,053

8

HYUNDAI

9.3%

$356

$17,216

9

MITSUBISHI

9.0%

$370

$17,205

10

CADILLAC

8.8%

$480

$25,294

11

FIAT

8.8%

$341

$16,543

12

FORD

8.6%

$424

$21,648

13

GMC

8.3%

$466

$25,077

14

JEEP

8.1%

$414

$21,885

15

VOLKSWAGEN

8.0%

$363

$16,909

16

MAZDA

7.8%

$355

$18,326

17

TOYOTA

7.7%

$385

$19,788

18

JAGUAR

7.6%

$503

$27,734

19

INFINITI

7.6%

$454

$24,728

20

BMW

7.4%

$476

$25,038

21

MERCEDES-BENZ

7.3%

$519

$28,792

22

SUBARU

7.2%

$361

$19,219

23

ACURA

7.0%

$409

$22,623

24

AUDI

6.8%

$482

$26,725

25

LEXUS

6.7%

$459

$25,393

26

LINCOLN

6.6%

$396

$22,205

27

LAND ROVER

6.2%

$569

$31,704

28

VOLVO

6.1%

$400

$20,877

29

MINI

5.7%

$355

$17,728

30

PORSCHE

5.0%

$635

$42,173

31

TESLA

4.6%

$818

$54,234

White Clarke Group adds Slyman to bolster North American team

ATLANTA - 

White Clarke Group recently bolstered its North American workforce.

The global provider of full lifecycle loan origination, servicing, collections and floorplan finance technology announced Heather Slyman has joined the firm as vice president of business development for North America.

Executives highlighted the addition of Slyman to the White Clarke Group global team is a direct testament to the focus and priority the company places on strong, long-term client partnerships.

Having earned a degree in computer information systems, Slyman spent her early career with Boeing as a programmer. Recruited by SouthStar to leverage her technical expertise and strength working with clients, she joined the wholesale mortgage lender, with responsibility to open and develop new territories and client relationships.

Following SouthStar, Slyman lead business development for CUSO, the Credit Union Service Organization, where she was responsible for restructuring the organization and the resulting revenue growth.

After successfully growing the business near five times over, she was recruited to join a loan origination software provider, specializing in retail point-of-sale, credit cards and student lending, to grow the business and enhance the out-of-box product offering.

“Heather’s success, serving both as a lender and as technology provider, makes her the perfect fit for our next phase of growth. Heather has the unique ability to pinpoint a client’s strategic needs and bring together the best solution,” said David Slider, group executive VP.

“Heather embodies the client-first culture that has differentiated White Clarke Group across the world, and we are excited to further dedicate that focus here in North America,” Slider went on to say.

RouteOne adds Fidelity Bank to eContracting footprint

FARMINGTON HILLS, Mich. - 

This week, RouteOne announced the addition of Fidelity Bank as an available eContracting finance source for dealers utilizing the RouteOne platform.

Fidelity Bank’s financing services are available to dealers throughout the South.

David Buchanan, executive vice president of indirect lending at Fidelity Bank, said, “We are excited to be a participant in the RouteOne eContracting program. The system allows us to process contracts faster, improving the financing experience for both dealers and their customers.”

RouteOne emphasized that eContracting can enhance the F&I process by enabling the digital origination and exchange of critical contract documents and data between dealers and finance sources. The company noted this situation can create a more professional auto finance customer experience, increases efficiency and reduces contracts in transit.

RouteOne has more than 6,600 active dealers currently using eContracting. With more than 40 live and in-pilot eContracting finance sources, RouteOne highlighted the growth has resulted in booking more than 8.2 million eContracts to date.

The combined rapid adoption by dealers and finance sources has led to notable growth in RouteOne’s non-captive eContracting share, which has more than doubled every year since 2014.

And now Fidelity Bank is part of the network.

“As a system of choice we are always pleased to expand our offering to our dealer customers,” said Jeff Belanger, RouteOne’s senior vice president of business development. “We welcome Fidelity Bank to our eContracting platform and are eager to collaboratively work with Fidelity to enhance the dealer and customer auto finance experience.”

Dealers interested in eContracting should contact their RouteOne business development manager at (866) 768-8301 or visit www.routeone.com/salesteam.

Survey reinforces value of online auto financing applications

IRVINE, Calif. - 

Eddie Castillo, general sales manager for the subprime division for Pine Belt Cadillac in Toms River, N.J., described how much a customer who has completed financing online prior to coming to the dealership improves the entire delivery experience — especially for consumers with soft credit histories.

Castillo relayed his experience as SpringboardAuto released results of a new survey that determined consumers want to finance their vehicle online and doing so significantly improves their overall car buying experience and perception of the dealership where they take delivery.

The survey, conducted among consumers who have recently financed a vehicle online with SpringboardAuto for the purchase of a vehicle from a dealership, provides a snapshot of how consumers’ impressions of dealerships improve when they can complete financing online before setting foot into the dealership and shows a significant positive impact on CSI and retention.

When consumers go online to get the financing wheels in motion, Castillo said, “You don’t go back-and-forth with the customer going over their credit or some of the very sensitive areas that sometimes can affect the situation. So now, they look at the car, they like the car, we agree on a price — and it’s an easier and more comfortable experience.”

The survey, conducted online in November and December, asked consumers to compare their perceptions of completing financing at the dealership versus completing it online prior to purchase. The result?

Customer satisfaction with the dealership increased on average by more than 100 percent when they completed their financing online as evidenced by them being likely/highly likely to:

  Financed online Financed at the dealership
 Give a high CSI score  63%  27%
 Recommend dealership to friends  55%  28%
 Return for service  49%  28%
 Return to dealership for next purchase  47%  21%
 Post a positive review  40%  18%

 

The majority of those surveyed also reported that the finance experience online was easier and more pleasant and hassle-free than what they had experienced previously at a dealership.  They stated that what they liked best is the ability to do it all online, followed by not being rushed and having more control over personalization. 

The survey also made clear that these consumers have been hampered by fear when heading to a dealership for financing, and that fear is fueled by lack of information and feeling disempowered.

“It comes as no surprise that consumers want to feel more empowered and more informed during the auto financing process — and that they want to do it at their own pace. What is especially striking is that if they have that opportunity, their positive feelings about their dealership skyrockets,” said Jim Landy chief executive officer and founder of SpringboardAuto. 

“With today’s technology providing multiple platforms that enable consumers to complete financing online and, in many cases, qualify for financing they may not otherwise be able to get through a dealership’s F&I process, the opportunity for dealerships is significant — especially if that platform is seamless, and easy-to-use,” Landy continued.

“Dealerships gain where it counts most to their bottom line: in service visits, loyalty, positive word of mouth — and that critical CSI score, all while saving time spent on financing paperwork,” Landy went on to say.

SpringboardAuto shared several other data highlights from the survey, including:

• Overall, customer perception of dealership increased in favorability by 115 percent as measured by likelihood to return to dealership, give a 5-star rating and recommend to friends.

• The financing preference of the vast majority surveyed is to go online prior to visiting the dealership: 86 percent versus 5 percent who want to do it in the dealership.

• These are not finance newbies: Eighty-one percent have financed via the dealership in the past.

• Eighty-four percent found the dealership financing experience frustrating and time-consuming, while only 16 percent found the experience hassle-free and convenient.

• Ninety-two percent said that working with an online financing platform was easier, more pleasant and hassle-free than their previous dealership finance experience.

• Respondents cited being able to complete financing online (82 percent) as the thing they liked most about the process, closely followed by not feeling rushed and being able to proceed “at my own pace” (80 percent) and more control over personalizing the contract (72 percent).

• Eighty-one percent said concerns about their credit score had held them back from financing via dealership in the past.

• The No. 1 reason why was, “I was unsure if I could get approved and I had no idea what my payments would be/what I could afford.” (77 percent)

• More than half said: “I did not want to be embarrassed at the dealership by being rejected.”

• Just more than two-thirds said: “I feel that my low credit rating means a dealer will take advantage of me.”

• Getting the best interest rate and term trumps all else, including experience, for top priority in auto financing, with pleasant and hassle free coming in second.

Landy added that, while there will always be consumers who want to finance in the dealership, today’s customer is increasingly looking for more control and personalization in the experience and to do it digitally — and that this is particularly true among millennials.

CARite secures $45M in funding to boost lease portfolio

BOSTON - 

CARite received an injection of funds to expand its leasing portfolio from a finance provider that has an understanding of what the company is trying to accomplish within the subprime market.

On Wednesday, Crystal Financial announced the completion of a $45.0 million senior credit facility for CARite. Headquartered in Madison Heights, Mich., CARite sells and leases pre-owned vehicles through their network of owned and partnered CARite locations.

Through Brite Financial Services, the company provides access to lease financing options for consumers with limited or poor credit history.

The companies indicated proceeds from this facility will be used to refinance existing debt and to fund lease portfolio growth.

“At CARite we are focused on making the car purchasing process a better experience through great selection, transparent pricing and multiple financing options,” CARite chief executive officer John Neary said. “At this important juncture in our company’s history, it was critical that our first institutional debt capital partner understand our business and our goals.

“Crystal’s extensive underwriting expertise in the specialty finance sector in addition to their creative structuring approach set them apart as we considered various options,” Neary continued. “Finally, the inclusion of a delayed draw facility as part of the overall commitment will allow us to continue to expand our lease financing business with certainty.”

Crystal Financial is a portfolio company of Solar Capital. As an independent commercial finance company, Crystal Financial provides senior and junior secured loans for both asset-based and cash flow financings (minimum of $10 million in fundings) to middle-market companies.

Crystal Financial co-CEO Steven Migliero Jr. explained why the firm decided to collaborate with CARite.

“John and his team have done a tremendous job building an organization that delivers a very strong consumer value proposition,” Migliero said. “We are excited to help facilitate their future growth and continued success.”

Black Book’s newest tool sharpens valuations based on vehicle history

LAWRENCEVILLE, Ga. - 

Auto finance companies and dealerships integrally involved in underwriting might have some kind of vehicle-history component embedded into their scorecards and other tools.

However, Black Book on Tuesday rolled out what the vehicle valuation company believes is its most precise tool yet — it’s VIN-specific History-Adjusted Valuations, an analytics-driven process for determining the impact a vehicle’s history has on its value.

Today when valuing a vehicle, Black Book contends that automotive industry professionals check the vehicle’s history report and make an “unscientific, educated guess” as to its impact on the vehicle’s value.

“This is subjective and problematic, as it often leads to mistakes in valuation,” Black Book said. “Making an inaccurate estimation on appraisal values can decrease margins for a dealer, as well as increase losses for auto lenders.”

Black Book has leveraged its advanced analytics capabilities and deep editorial expertise to bring insight into precisely how a vehicle’s historical events impact its value. The company insisted this development is critical since a recent survey of automotive professionals indicated that 96 percent of respondents feel a vehicle’s history has a moderate to significant impact on the value of a used vehicle.

Black Book’s creation of History-Adjusted Valuations analyzes multiple factors and events in a vehicle’s history such as number of owners, vehicle usage, accident and accident severity, title issues, flood/hail/fire damage, CPO history, and other variables that are not obvious when physically inspecting a vehicle.

 “We are providing our customers  a competitive advantage by precisely valuing a vehicle based on its VIN-specific history," said Jared Kalfus, executive vice president of revenue at Black Book. “Whether appraising a trade-in, bidding at auction or valuing a vehicle portfolio, precision drives profit, growth and customer satisfaction.”

Black Book’s customer promise is to deliver ever more precise valuations. On average, History-Adjusted Values are 31 percent more precise when compared to the auction transaction price than valuations without a history adjustment included.   

“The evolution of data and analytics continues to have a profound impact on the overall auto industry, from dealers and remarketers, to manufacturers and lenders,” said Anil Goyal, executive vice president of operations at Black Book. “Our analytics play a significant role in recognizing the patterns in a vehicle’s history and determining their impact on each vehicle’s value, enabling our customers to make better decisions.”

To learn more about Black Book’s new History-Adjusted Valuations, call (800) 554-1026.

F&I Express and F&I Administration Solutions partner to manage product cancellation process

GRAPEVINE, Texas - 

F&I Express and F&I Administration Solutions recently expanded their relationship to help finance companies, F&I product providers and dealerships improve their aftermarket product cancellation performance and compliance.

The companies highlighted that the integration of F&I Express and F&I Admin addresses the issues that have come forward in recent months about major problems finance companies are encountering with aftermarket product cancellations. Express Recoveries, F&I Express’ eCancellation solution, can help solve the issues and moves the manual process to an electronic connection between lenders and providers, which can allow for streamlined and compliant cancellations.

The Express Recoveries platform from F&I Express can enable finance companies to submit F&I product cancellation requests directly and simultaneously to dealers and product providers. The integrated Express Recoveries/F&I Admin platform can create an electronic network that accelerates the processing and recovery of refunds for cancelled F&I products.

In addition, the companies pointed out that full cancellation lifecycle reporting can improve the ability of lenders to comply with the changing regulatory environment and to better service their dealer and consumer customers.

Rich Apicella, general manager of the Express Recoveries program at F&I Express, said, “Lenders require access to data from their product provider and dealer partners to fulfill their regulatory obligations for product cancellations.

"By offering an integrated platform, the F&I Express and F&I Admin team provides the tools and market transparency so that lenders, product providers and dealers can work together more efficiently to ensure consumers receive the product cancellation refunds they are entitled to,” Apicella continued.

The companies went on to mention finance companies are held legally liable by state and federal regulators to process cancellations in a compliant and timely manner. Finance companies that are using the Express Recoveries solution have authorized F&I Express to securely manage their cancellation process.

“We are very pleased to be the first to work with F&I Express to develop this electronic solution to a problem that has been in existence for many years,” said Kumar Kathinokkula, chief operating officer of F&I Admin. “Not only will this streamline the process and ensure lenders can deliver to their regulatory requirements, but this will also add significant efficiencies to our F&I product administrator customers.”

For more information, visit fandiexpress.com.

4 recommendations for an F&I edge to start 2018

WILKES-BARRE, Pa. - 

The team at GWC Warranty offered four suggestions to help dealerships looking for an edge in January and the rest of 2018.

Recommendations to boost sales as well as ongoing success in the F&I office, GWC Warranty declared that “there’s no better time to try something new and set your dealership apart than a fresh start ahead of selling season.”

Here is the rundown that GWC Warranty shared in a recent blog post.

1. New training

GWC Warranty acknowledged that enhancing the training your dealership personnel absorb sounds easy enough.

“But it also probably sounds time consuming. Spoiler alert: It doesn’t have to be,” the company said.

“The best training is the training that fits your schedule,” GWC Warranty continued. “Down time on a slow Monday? Check out a course. Customer running late for an appointment? Learn a new trick or trade. With tools like GWC’s Virtual Training, you can train on what you want and when you want with just a few clicks.”

2. New technology

GWC Warranty stressed that dealerships shouldn’t let the word “technology” give managers the perception that they will be “biting off more than you can chew.” The company reiterated that the point of technology is to make things simpler for the dealership to arrange financing and watch metal roll over the curb.

“You might surprise yourself with something new. Take Covideo for instance,” GWC Warranty noted. “You’re probably already making calls to potential leads and new customers, so why not try a video message to liven up your chats? It could be just the bump you need to convert more leads than last year.”

3. New leads

Speaking of leads, GWC Warranty understands that stores are always going to be looking for new ones. The company suggested that the key in 2018 is to look in places where store personnel never previously looked.

Starting with your vehicle service contract business could be a good start, according to GWC Warranty.

“Checking in on contracts you’ve sold that are expired or expiring could help you re-engage with a customer who’s starting out the search,” the company said. “And if you make the phone ring before they start shopping around, you’ve already got a leg up on the competition."

4. New regulations

GWC Warranty acknowledged that what state and federal regulators choose to do is often out of the dealership’s control.

“With every year there are seemingly more (or fewer) regulations and its incumbent on your business to adjust,” the company said. “But you’re not a legal expert nor do you employ one.

"So in 2018, it could be worth your while to enlist the services of compliance experts to protect your business. If you’re a GWC Warranty Elite Dealer, you’re in luck and can sign up for compliance tools and training at absolutely no cost,” GWC Warranty went on to say.

More dealer assistance can be found at GWC Warranty's blog that's online here.

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