Financing Archives | Page 20 of 98 | Auto Remarketing

Launcher introduces budget-friendly LOS for small lenders

Launcher is looking to help not only well-established subprime auto finance companies, but also shops looking to get a toehold in the space while they stretch their limited resources.

The technology provider specializing in loan originations, recently announced the release of its new product offering, appTRAKER launchPAD, which is a loan origination system packaged with all of the essential features necessary to propel startups and small finance companies off the ground.

Launcher explained launchPAD was created for finance companies that are looking for a fully-functional loan origination system without the expensive price tag.

“We recognized that there isn’t a good product available for smaller institutions who want a feature-rich system,” Launcher president Nikh Nath said. “We have found that lenders, irrespective of their size, desire access to the same tools in order to succeed, compete and grow. We have developed a solution that is easily implemented, contains all of the necessary origination tools and provides a robust platform for their users.”

Nath went on to highlight launchPAD was designed to be an out-of-the-box solution with little to no additional configuration needed. This functionality is geared to provide finance companies with a quick turnkey implementation to get them originating loans within launchPAD in just a few days.

The company added finance companies will not miss out on functionality as launchPAD is bundled with the same suite of products as Launcher’s appTRAKER Loan Origination System. Finance companies will have access to Dealer Portal, a unique solution that can facilitate more efficient interaction between the finance company and its network of dealers.

Along with application submission and decision information, Dealer Portal can offer communication with live buyers and allow dealers to track the progress of verifications, stipulations, and funding distributions. Finance companies will also have use of appTRAKER DOCS for paperless Document Management and retention along with myDEALER.CARE, a Dealer Relationship Management system for organizing their dealer base.

“As lenders grow, they will be able to seamlessly grow into our fully customizable solutions without any loss of history or data,” Launcher said.

To learn more, go to www.launcher.solutions.

Westlake rolls out branded-title financing

After a successful pilot program, Westlake Financial Services now is catering to dealers that want to retail vehicles with branded titles to consumers who need to finance these purchases.

According to a news release distributed last week, Westlake said it now finances vehicles with brands in 47 states. The company indicated vehicles labeled as salvage, junk, rebuilt, water damage, storm damage, flood, hail damage, lemon or crash test vehicle are all eligible for the branded vehicle program.

“We tested financing branded vehicles in a few markets and saw tremendous success,” Westlake business strategic supervisor Pamella Teixeira said. “The success of our pilot allowed us to expand the program into all states excluding New York, Massachusetts, and Puerto Rico. Dealers can continue to rely on Westlake to provide finance for any vehicle or any customer on their lot.”

Westlake senior vice president of servicing Brian Renfro added, “The branded vehicle program provides dealers the opportunity to finance almost any vehicle with Westlake; an option that isn’t given by most other finance companies.”

Westlake Financial Services offers financing to franchised and independent dealers in all 50 states plus Puerto Rico.

Dealerships interested in learning more about Westlake Financial Services can contact Westlake directly at (888) 893-7937 or online at www.westlakefinancial.com.

Experian: Used-vehicle paper quality on the rise

For finance companies that like to book as much used-vehicle paper as they can originate, the latest Experian data shows institutions are not having to take on as much risk to fill that portion of their portfolio objectives.

Findings from the Q1 2019 State of the Automotive Finance Market report showed that the percentage of consumers choosing used vehicles reached all-time highs. Analysts noticed the figure for prime hit 61.88 percent, and the super-prime reading reached 44.78 percent.

Experian explained in a news release distributed on Thursday morning that this trend comes as questions around vehicle affordability continue to dominate industry conversations.

The average amount financed for a new vehicle surpassed $32,000 in Q1, while the average amount financed for a used vehicle was slightly above $20,000. Additionally, the average monthly payment for a new vehicle was $554, and the average monthly payment for a used vehicle was $391.

“While vehicle affordability continues to be top of mind for the industry, consumers are actively seeking ways to ensure they can afford the vehicle they purchase — a positive sign for all parties involved,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions.

“It’s important that lenders and dealers continue to monitor these trends so they can work with car shoppers to help them find the right vehicle with the right financing options,” Zabritski continued.

The other side of the affordability conversation has focused on delinquency trends.

In Q1, Experian reported 30-day delinquencies saw an increase to 1.98 percent, up from 1.9 percent a year ago. That said, banks, credit unions and finance companies all saw slight decreases in 30-day delinquency rates, and 60-day delinquencies remained relatively stable at 0.68 percent year-over-year.

Zabritski pointed out that it’s important to keep in mind that the 30-day delinquency rate is still below the high-water mark in Q1 2009 when it soared to 2.81 percent during the Great Recession.

“The delinquency rate is certainly a trend worth keeping an eye on, but it’s important to consider it within the larger historical context,” Zabritski said. “Other factors, like subprime originations remaining at historic lows, help paint the full picture of the industry.”

Experian mentioned additional findings for Q1 included:

• Outstanding automotive balances totaled $1.181 billion.

• The percentage of outstanding loan balances held by subprime and deep-subprime consumers dropped below 19% (18.77%).

• Credit scores remained stable, with some improvement seen in used, which increased from 655 to 657 year-over-year. The average new credit score (719) is the same as Q1 2018.

• Average new loan terms decreased to 68.85 months, while average used loan terms increased to 64.67 months.

• The percent of used vehicles that are leased saw a slight year-over-year increase from 4.01% in Q1 2018 to 4.68%.

• The gap between the average new and used monthly payments continued to widen, reaching $163.

Average May used & new APR softens to lowest point of year

Edmunds determined average interest rates for both used-vehicle and new-vehicle financing dipped to their lowest levels of 2019 in May.

Fueled in part by captives increasing the availability of zero percent financing, Edmunds found the annual percentage rate (APR) on new financed vehicles averaged 6.1% in May, compared to 6.27% in April. Edmunds previously indicated the year-high came in March at 6.36%. In February, the average APR on new financing stood at 6.26% after opening month the year registered at 6.19%.

Analysts said this latest month-over-month dip is in part due to a bump in zero percent finance deals from automakers in May. These deals constituted 5.7% of financed transactions, compared to 3.2% in April.  

“Shoppers who made it to the dealership on Memorial Day weekend were lucky enough to snag some of the best deals we’ve seen all year, but that’s really not saying much,” said Jeremy Acevedo, Edmunds’ manager of industry analysis.

“Even with a slight uptick in zero percent finance offers compared to last month, average monthly payments reached record highs and interest rates still hovered above 6%. These conditions are tough on shopper wallets, no matter how you look at it,” Acevedo continued in a news release.

On the used-vehicle financing side, Edmunds noticed the average rate softened to 8.67% in May from 8.83%. Like for new models, average used-car APR also hit the year-high in March at 9.50%. In February, analysts pegged the used average at 8.95%, up from 8.88% in January.

Especially in the new-vehicle market, Edmunds analysts caution that things aren’t going to get much better for vehicle shoppers through the summer due to automakers curbing production to adjust to slumping demand.

“Now that dealers have moved a good number of old cars off their lots, shoppers might not be able to count on later summer sales events for better bargains like they have in the past,” Acevedo said.

“We’re nearing a tipping point: As prices and interest rates continue to rise, we might start seeing shoppers getting priced out of the new market altogether. And if the president’s recently proposed auto tariffs actually go into effect, this could be the case for even more consumers,” Acevedo continued.

Acevedo’s colleague at Edmunds, Jessica Caldwell, was among the industry observers reacting to President Trump’s potential actions against Mexico in this previous report published by Auto Remarketing.

New-Car Finance Data

Used-Car Finance Data

Source: Edmunds

Credit Acceptance adds COO to executive team

Credit Acceptance Corp. created a new executive position this week and appointed an individual who has been with the company for 17 years to the position.

According to a filing with the Securities and Exchange Commission posted on Thursday, Credit Acceptance named Jonathan Lum as chief operating officer. Lum has been with the company since 2002 in a number of roles, starting in the finance department and moving up to accounting manager before being promoted to director of projects and support in 2007 and director of policy compliance in 2008.

Credit Acceptance promoted Lum to vice president of internal audit and compliance in 2009 and then to his most recent role of senior vice president of the dealer service center in 2011.

The executive move comes after Credit Acceptance finished the first quarter with consolidated net income of $164.4 million, or $8.65 per diluted share, representing a rise from $120.1 million, or $6.17 per diluted share for the same period in 2018.

The company reported its adjusted net income, a non-GAAP financial measure, for the three months that ended March 31 came in at $153.6 million, or $8.08 per diluted share, up from $118.9 million or $6.11 per diluted share a year earlier.

Credit Acceptance generated those Q1 figures even as originations remained nearly flat year-over-year. The company booked 112,844 contracts in Q1, up from 112,345.

The company’s active dealer network did rise by a notable amount in Q1. Credit Acceptance’s collection of stores that receive funding for at least one contract per quarter rose 9.9% year-over-year to 9,633.

“I think the first quarter is usually a good quarter for enrolling new dealers. We have a larger sales force than we had a year ago. So those are probably a couple of reasons why new dealer enrollments were pretty good,” Credit Acceptance chief executive officer Brett Roberts said during the company’s latest conference call.

“In general, our program works very well at a small independent dealer. It works very well with a larger franchise dealer. Sometimes the selling process can be different,” Roberts added later in the call. “The larger organizations typically there’s more people that need to sign off on a new lender, so it could be a little bit more complex. And then when you get into stores that have multiple locations and maybe a corporate office, there’s another selling process that occurs there. But other than that, the program works in all kinds of environments.”

TransUnion considers how quickly 2 auto-finance metrics might rise

SubPrime Auto Finance News put Brian Landau on the spot a bit after TransUnion released its latest auto-finance data. The senior vice president and automotive business leader pondered the question about which of these milestones might happen first. Will the market surpass 100 million outstanding vehicle leases and installment contracts, or will the average auto debt per consumer surpass $20,000?

During a phone conversation this week, Landau divulged that the number of consumers already currently holding some form of auto financing is approaching 90 million, which is up from the 82.2 million that TransUnion officially reported as of the close of the first quarter. Landau explained that metric moving higher is “heavily reliant on just the growth of the population. The market is fairly saturated. Every household has at least one car today. I don’t expect that to grow any faster than the rate of population, to be honest.”

With those thoughts in mind, Landau suspects that the average amount of auto debt consumers are carrying could surpass $20,000; perhaps in the not too distant future, since TransUnion pinpointed the average figure at $18,845 as of the close of Q1.

“I will say that there are some drivers in place now to grow the average transaction price; the shift to SUVs from sedans and SUVs typically have a larger price tag,” Landau said. “In addition, people are looking at vehicles as an extension of the Internet-of-Things (IoT), connecting to their phones and other electronics. That’s going to add a higher and heftier price tag to the purchase.”

TransUnion reported that auto originations grew 1.7% in Q4 2018 and have grown year-over-year in each of the past four quarters, reversing the negative trend caused by the pullback in the market the second half of 2016 and full-year 2017. Landau pointed out that super prime and subprime borrowers led this growth, with Q4 2018 year-over-year increases of 5.2% and 4.4%, respectively.

“When we look at origination growth in those two segments (super prime and prime), they’ve been pretty consistent,” Landau said. “There has been positive growth for some time now, even during the pullback. My perspective is that as the lenders in the market were being cautious during the pullback period, there was a flight to safety to those segments of the market. Low delinquency and the need to grow the book profitably have driven a lot of the growth on that end of the spectrum. I’m not surprised. That’s been consistent with what we’ve seen over the last few quarters and for some period of time now.

“On the subprime segment, we’ve actually seen some large gains relative to what the origination growth was during the pullback,” he continued. “It seems like there is a little bit of a whip-saw effect going on in the subprime segment. I think that is due to the fact that lenders are feeling much more confident in this area of the credit spectrum, more than they did in 2016 and 2017. In fact, if we go back to Q2 (of last year), we start to see that positive gain exceeding 5% year-over-year relative to what it was just a year prior when it was 10% or more down year-over-year. That’s a large gain from the low end being down 10% to the upswing of positive 5% in the course of a four-quarter timeframe.”

Meanwhile, TransUnion determined serious borrower delinquency rates (60 days or more past due) continued to remain stable at 1.31% in the first quarter. Q1 2019 was the seventh consecutive quarter with a year-over-year delinquency variation of less than 10 basis points.

Landau closed by reiterating how stable the auto-finance market is as a maelstrom of media coverage is swirling and stemming from other parts of the credit world.

“There is a lot of clamor around other parts of financial services particularly around student lending, but auto is the third largest asset class before mortgage and student lending. And it is one of the most secure, having one of the lowest delinquency rates of all asset classes out there, second only to (home equity lines of credit). And it’s one of the fastest growing segments within financial services, second only to personal lending, which has been driven primarily by the fintech boom,” Landau said.

Q1 2019 Auto Loan Trends

*Note: Originations are viewed one quarter in arrears to account for reporting lag. Source: TransUnion.

Latest Equifax data shows continued interest in subprime to open 2019

The latest auto-finance information available from Equifax revealed trends that made the company give bullish projections of what the subprime slice of the market might be like for the rest of the year.

Equifax’s auto-loan originations observations through January reported as of March indicated that 1.78 million contracts, totaling $41.3 billion, have been originated year-to-date. This data marks a 0.8% increase in accounts and a 2.8% increase in balances over this time last year.

The credit bureau noted auto loans represent 86.5% of all auto account originations and 89.5% of auto origination balances year-to-date.

Analysts tabulated that 379,100 auto loans have been originated year-to-date to consumers with a VantageScore 3.0 credit score below 620, which are generally considered subprime accounts. Equifax determined this figure represented a 1.9% increase from January 2018.

The company computed these newly issued subprime contracts have a corresponding total balance of $7.07 billion, a 5.3% increase year-over-year.

Through January, Equifax found that 21.3% of auto contracts were issued to consumers with a subprime credit score, and they accounted for 17.1% of origination balances. In 2018, year-to-date, the account share was 20.7%, and balance share was 16.4%.

Analysts went on to mention the average origination amount for all auto loans issued in January 2019 was $23,464. This figure marked a 3.3% increase over January 2018.

Equifax added the average subprime contract amount was $18,934. This figure is a 5.0% increase compared to January of last year.

“While subprime origination activity and balances remain steady and in check, the data is showing an increase entering the year,” said Jennifer Reid, Equifax’s vice president of automotive marketing and strategy.

“Prices on new cars and trucks continue to rise, but I think we’re seeing more evidence through subprime numbers that there is continued interest and activity in used vehicles for 2019,” Reid continued. “We anticipate this will persist in the coming months.”

Update on leasing

Equifax also discussed how the leasing market is performing through January and reported as of March.

Analysts found that 279,400 auto leases, totaling $4.8 billion, have been originated year-to-date. This is a 3.4% decrease in accounts and a 3.0% increase in balances from this time last year.

Equifax pointed out auto leases accounted for 13.6% of all auto accounts originated through January and 10.5% of balances.

The credit bureau also learned that 25,000 auto leases have been originated year-to-date to consumers with a VantageScore 3.0 credit score below 620, which again are generally considered as subprime accounts. That amount represented a 3.3% decrease from January of last year. These newly issued leases have a corresponding total balance of $462.1 million, a 4.6% increase year-over-year.

Through January, Equifax determined 8.9% of auto leases were issued to consumers with a subprime credit score. Through January of last year, the company said the share was the same.

Finally, the average origination balance for all auto leases issued in January was $17,137, according to Equifax. This amount marked a 5.7% increase from last January. The average subprime lease amount was $18,150, a 6.3% increase over a year ago.

“Note that lease origination values reflect the contract amounts only and exclude expected vehicle residual values,” Equifax said.

Auto/Mate rolls out Deal Closeout for desking module

Auto/Mate Dealership Systems recently enhanced its product offering aimed at streamlining the sales process and improving the workflow of sales managers, F&I managers and office clerks.

The company released Deal Closeout, a new feature in the Desk/Mate Module of its dealership management system (DMS). Desk/Mate users can now work and close deals all in one module.

“In most dealership management systems, the process of working a deal involves jumping around several different screens or programs. Deal Closeout simplifies that process so it can be performed all in one place, saving employees a significant amount of time,” said Mike Esposito, president and chief executive officer of Auto/Mate Dealership Systems.

The release of Deal Closeout will sunset Auto/Mate’s F&I Billing Module, a separate application in which F&I managers manually closed deals and posted them to accounting. Eliminating this extra step saves valuable minutes per deal and expedites the posting of deals to accounting, according to the company.

Auto/Mate Dealership Systems highlighted Deal Closeout comes equipped with enhanced security permissions that can provide system administrators more control over which employees can access and/or make changes to a sold or closed deal. An audit log keeps records of which employees closed deals and when.

Deal Closeout is available to all new customers at no additional cost. The new feature is currently being rolled out to Auto/Mate’s existing customers.

For more information, visit www.automate.com.

Experts differ on what current consumer confidence really means

We’re nearly halfway through the second quarter, and experts are seeing varying trends about whether consumers are prepared to commit to buying a vehicle at your dealership and financing the purchase through your finance company.

While a pair of surveys that measure consumer confidence each month demonstrated some upbeat feelings, the team at Cox Automotive is taking a more cautious approach, especially after reviewing tax-refund information from the IRS.

First, let’s consider two measures of consumer confidence.

The Conference Board Consumer Confidence Index improved in April after decreasing in March. The index now stands at 129.2, up from 124.2 in March. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions – increased, from 163.0 to 168.3. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 98.3 last month to 103.0 this month.

“Consumer Confidence partially rebounded in April, following March’s decline, but still remains below levels seen last fall,” said Lynn Franco, senior director of economic indicators at The Conference Board.

“The Present Situation Index, which had decreased sharply, improved in April, as did consumers’ short-term outlook. Overall, consumers expect the economy to continue growing at a solid pace into the summer months. These strong confidence levels should continue to support consumer spending in the near-term,” Franco continued.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was April 18.

Consumers’ assessment of current conditions improved in April. Those stating business conditions are “good” increased from 34.7 percent to 37.3 percent, while those saying business conditions are “bad” decreased from 12.4% to 11.7% . Consumers’ assessment of the labor market was also more upbeat. Those stating jobs are “plentiful” increased from 42.5% to 46.8%, while those claiming jobs are “hard to get” decreased from 13.8% to 13.3%.

Consumers’ short-term outlook also improved in April. The percentage of consumers expecting business conditions will be better six months from now increased from 17.2% to 19.9%, while those expecting business conditions will worsen declined from 10.0% to 9.1%.

Consumers’ outlook for the labor market was more favorable. The proportion expecting more jobs in the months ahead increased from 16.8% to 17.2%, while those anticipating fewer jobs decreased from 14.3% to 13.2%. Regarding their short-term income prospects, the percentage of consumers expecting an improvement was virtually unchanged at 21.5%, while the proportion expecting a decrease declined, from 7.4% to 7.0%.

Meanwhile, the University of Michigan’s Index of Consumer Sentiment has recorded only small monthly variations for more than two years.

The Sentiment Index has averaged 97.2 during the past 28 months — identical to the April 2019 reading — and has remained between 95.0 and 99.0 for 21 of those months.

Confidence has been maintained at high levels due to low rates of unemployment and inflation as well as renewed income growth, according to economist Richard Curtin, director of the U-M Surveys of Consumers. Although consumers now anticipate a slower pace of economic growth, Curtin said they expect those favorable conditions to persist during the year ahead.

“Positive views of current buying conditions are now dominated by people’s favorable income prospects,” he said. “The highest number of consumers in the past half-century mentioned favorable income prospects when asked to explain their views about making discretionary expenditures.

“Nonetheless, consumers displayed a recognition that favorable economic conditions will not last forever and so remained cautious spenders,” Curtin continued. “To be sure, declines in interest rates have helped to partially offset the falloff in favorable perceptions of prices, especially for home purchases. Overall, the data indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2019.”

The University of Michigan research also showed recently improved finances were cited by 53% of all consumers in April, equal to the average level recorded during the past year, which is the highest average since 1999. Income gains remained widespread and reports of increases in net household wealth rose among middle- and upper-income households.

When asked about their financial prospects for the year ahead, the Michigan survey showed 44% anticipated improvements compared with just 8% who expected worsening finances. This was the best overall reading since 2004. When asked about longer term financial prospects, 60% reported in the April survey that they expected to be better off financially over the next five years.

As upbeat as those surveys might be, Cox Automotive considered data percolating from other sources.

“First-quarter real GDP growth was much better than expected at 3.2%, but it wasn’t a result of consumer spending or business investment,” Cox Automotive said in its newest Data Point report. “A build-up of inventories, temporary improvement in net exports and weak inflation made weak consumer spending look better than it really was.

“Growth in business investment also declined,” Cox Automotive continued. “The confusing numbers make the start of the year look better than it really was, but they also set us up for worse numbers next quarter. We could have the weakest second quarter since 2013, which only managed to produce 0.5% growth.”

Furthermore, the latest update from the IRS arriving on May 3 indicated that the total amount of refunds ($274.3 billion) as well as the average amount per filer ($2,732) are both down 2.6% and 1.6%, respectively, year-over-year.

“The average masks the disparate impact of winners having better refunds and losers getting much less or even owing money this year when they enjoyed a refund last year,” Cox Automotive said.

Kindschi comes out of retirement to join Open Lending

Kevin Kindschi called it a “detour from retirement,” to work with credit unions about product that can help them serve members with subprime credit histories.

After retiring from CUNA Mutual following a 30-year career, Kindschi recently joined Open Lending as regional vice president of sales in a territory that includes credit unions in California, Arizona and Nevada.

Open Lending works exclusively with automotive finance companies by providing contract analytics, risk-based pricing, risk modeling and automated decision technology. Based in Austin, Texas, the company serves more than 400 financial institutions nationwide.

Lenders Protection, the flagship product of Open Lending, can provide default insurance so credit union leaders can feel greater confidence and security — for the credit union, its members and its regulators — in finalizing contracts to members with lower credit scores.

Lenders Protection can allow credit unions to reach more members with the goal of helping them rehabilitate their credit while generating higher yields on the loans credit unions make and lifelong loyalty from the members they assist.

“This was a detour from retirement,” Kindschi said with a chuckle, noting that most of his friends were still working and he wanted to, too. “It’s refreshing to be doing something a little different. It’s nice to focus on one product and do it well.

“Open Lending brings a tremendous value to the table,” Kindschi continued. “A lot of people need financial help. With Open Lending’s Lenders Protection, credit unions will definitely be able to serve more members, particularly those who are credit challenged.”

Kindschi gave the example of his 22-year-old son who wanted a credit card but was turned down by a credit union because he was young and didn’t have much credit. He then went to another credit union that approved him. He soon became a raving fan of his credit union and subsequently secured auto financing from that credit union, as well.

“My son’s credit union created a sense of loyalty for my son toward the credit union,” Kindschi said, “and that’s the type of opportunity Open Lending’s Lenders Protection affords credit unions

“Credit unions have increased their loan-to-share ratios, but that’s mostly on A-paper loans,” Kindschi went on to say. “With Lenders Protection, credit unions can reach more members, earn more interest income and help more borrowers with lower credit scores achieve greater financial stability and earn their way to lower rates.”

Open Lending chief executive officer John Flynn described what having someone like Kindschi on the company team.

“We are very excited to welcome Kevin to the Open Lending team,” Flynn said. “He brings a wealth of industry knowledge and a history of sales success through integrity that we appreciate here.”