DPG Investments — a company that currently has 26 private equity holdings while overseeing $1.5 billion in capital commitments since 2004 — closed on a line of credit on Friday so it can dive deeper into the non-prime auto finance business.
Spring Tree Lending, a portfolio company of DPG, secured the line of credit provided by the Spartan Financial division of American Credit Acceptance.
Spring Tree, based in Atlanta, buys and services non-prime auto loans from small and midsize dealers and finance companies in the southeastern U.S.
DPG chairman Dan Galvanoni said, “This line of credit will further the growth of Spring Tree by providing an additional source of funds to acquire loans from our vast dealer network. We anticipate an excellent relationship with Spartan and look forward to expanding that relationship up to as much as $10 million.
Jerry Hudspeth, managing director of DPG and CEO and managing partner of Spring Tree, added, “The non-prime auto lending market is an important part of the economy. We are now poised for rapid growth in this dynamic segment while providing best-in-business practices.”
RouteOne and Toyota Financial Services (TFS) on Wednesday announced that they are bringing Toyota dealers the ability to automatically book TFS electronic contracts with no human interaction. This technology, called Straight-Through Processing, is designed to offer dealers faster funding by alleviating the need for manual review of contracts.
Officials explained Straight-Through Processing is available for new, retail electronic contracts that originate from a RouteOne-generated credit application and meet TFS-specified contract and purchase criteria. Deals with well-qualified buyers are among the best candidates to receive the benefits of Straight-Through Processing, which include faster funding, reduction of required documentation, ability to provide customers with account numbers at the dealership, and possible reduction in held offerings.
“As consumers' expectations and eContracting adoption both continue to rise, we are dedicated to delivering enhancements to our product line that ensure the utmost efficiency for our dealers, finance source partners, and most importantly their consumers,” RouteOne chief executive officer Justin Oesterle said.
“We are pleased to partner with TFS to bring Toyota dealers the technology powering Straight-Through Processing, which accomplishes these goals with the automation of previously manual processes,” Oesterle continued.
Toyota Financial Services group vice president of sales and marketing Mike Wells added, “Our mission is to provide always better service to consumers and to our dealer partners.
“Straight-Through Processing streamlines and expedites key aspects of funding, leading to a better experience for consumers and dealers while freeing our team members to work on other critical functions,” Wells went on to say.
Automated, online lender management platform E-Credit Express (ECE) recently entered into an agreement with NADA Used Car Guide to speed up the used-vehicle sale and loan approval process.
The integration of NADA Used Car Guide's values into the ECE platform that connects dealers to more than 1,300 finance companies instantly is meant to streamline the sales process and make all vehicle value information available to finance companies with the platform’s credit application feature.
“We are proud the industry's most trusted vehicle values will be used in the E-Credit Express platform,” said Mike Stanton, vice president and general manager of NADA Used Car Guide.
“Auto dealers will no longer have to go outside of the platform to include vital pricing information for lender approval. This ultimately makes for a faster sales process benefitting the customer,” Stanton continued.
According to Paul Pawlusiak, president of E-Credit Express, “Our lender management platform connects customers to banks and lenders instantly. With the values integrated by NADA Used Car Guide, lenders will be able to make quick, easy, 24/7 loan decisions in five minutes or less."
GWC Warranty acknowledged vehicle shoppers are looking for a bargain, and dealers are looking to turn a profit, meaning those two worlds collide during the art of negotiation.
As experienced negotiators, GWC Warranty pointed out every sales and F&I professional has techniques that have worked for years. But as customers evolve, the company insisted that so must negotiation skills.
In light of that backdrop, GWC Warranty offered three suggestions in a recent company blog post that can lead to a positive result for both stores and their customers.
1. Honesty is the best policy, and so is transparency
GWC Warranty emphasized today’s customers are more informed than ever.
“In being completely transparent about every line item they’re paying for, you’re converting their experience from one of resistance to one of receptiveness,” company experts said. “In doing so, customers will be more likely to let their guard down and see value in F&I products rather than defaulting to raising an objection.”
2. Have an open mind, and don’t fear change
GWC Warranty insisted the best businesses are the ones that can evolve to meet the needs of their customers.
The company recommended that dealerships consider changes managers can make — both large and small — to the way they negotiate with customers.
“It could start small with your employees and removing words with negative connotations from your daily vocabulary — things like ‘close’ or ‘sell.’ Or it could be changes to the way you present your menu that give customers an option rather than forcing them to fight for the products they want at a price they feel is fair — which leads us to the final piece of advice,” company experts said.
3. Prioritize price
As GWC Warranty previously mentioned, customers are more informed than ever.
“They’ve shopped long and hard for the car they want,” experts said. “While price is often the focus of a negotiation, vehicle make and model, selected options and other features are proven to be higher priorities than price for customers.”
If a buyer has made it to the F&I office, GWC Warranty pointed out they’ve already picked the vehicle they want.
“Be willing to work toward making F&I products work for both of you, but know that your customer is already comfortable with the purchase,” experts said.
“The time in the F&I office is best served ensuring your customer can drive that vehicle confidently for many miles to come — not haggling on price or a laundry list of products that don't fit their personal situation.
Editor’s note: This post and more best-practice recommendations can be found at gwcwarranty.com/dealers/accelerate-blog.
Along with introducing a new tool to help credit union members who are considering refinancing their vehicle installment contract, GrooveCar recently appointed five executives to new positions as part of its industry growth initiatives.
In an effort to serve an expanding credit union auto-buying marketplace, GrooveCar made the following personnel moves:
—Richard Charles Hess has been promoted to national vice president of sales.
—Karen Johnson has been appointed public relations director.
—Eric Budzinski has been promoted to assistant vice president of marketing.
—Christine Forsythe has been named client relations director.
—Michelle Michann has been hired as a regional manager for CU Xpress Lease.
GrooveCar is celebrating its 17th year in business. The once regional auto-buying resource has expanded across the U.S. into more than 28 states as diversified product offerings are added to meet the expansion goals of credit unions.
“Our recent staff increases reflect the desire to meet our credit unions at all levels and partner with them with unique strategies for auto loan growth in the future,” GrooveCar senior vice president Frank Rinaudo said.
Previously, Hess had served as director of leasing for CU Xpress Lease. Prior to joining the company he was regional sales manager for the Northeast region at Wells Fargo in Chester, Pa.
As national vice president of sales for GrooveCar, Hess will be responsible for managing the CU Xpress Lease sales team and creating competitive lease programs for the division’s credit union partners.
“I look forward to reaching and surpassing lease volume goals as well as developing new markets,” Hess said.
Johnson had served as vice president of marketing for GrooveCar. Prior to joining the company in February of last year, she served as director of marketing for World Wide Security in Garden City, N.Y.
In her new role as public relations director for GrooveCar, Johnson is responsible for corporate communications, media relations and content creation for the company.
“It’s important for GrooveCar to continue to expand its market position while serving the information needs of our credit unions,” she said.
Budzinski joined the company as marketing coordinator for GrooveCar in July of last year. Prior to this he served as vice president of EZVille Ltd. in Ronkonkoma, N.Y.
Under his direction as AVP of marketing for GrooveCar, Budzinski is responsible for developing, establishing and maintaining marketing strategies to meet the company’s organizational objectives.
“I’m excited to be at the forefront of emerging technologies and innovations,” he said.
Forsythe joined GrooveCar this year as client relations director. Prior to joining the company, Forsythe was cremation coordinator for Moloney Family Funeral Homes, headquartered in Ronkonkoma, N.Y.
As client relations director, Forsythe is responsible for selling and managing the auto-buying program with GrooveCar’s partners.
“My role is to grow in established markets and develop new areas of business,” she said.
Michann was hired in June as regional manager for GrooveCar’s CU Xpress Lease. Her position involves dealership relations and assisting credit union partners with initiating their leasing programs while also providing support services.
Michann’s prior position was in management at Enterprise Rent-A-Car.
“I enjoy the ongoing responsibility of managing communications between our automotive dealers and credit union partners,” she said.
GrooveCar rolls out auto refinance calculator
In other company news, GrooveCar recently added an auto refinance calculator to its vehicle buying resource. With low rates in abundance, credit union members can now calculate their savings in an easy-to-use refinance tool found online.
“This is a great feature for members to witness savings instantly by inputting information on their current loan. Fast results and easy-to-use instructions allow members to see a calculated lower monthly payment. In some instances this may save thousands over the life of the loan,” GrooveCar vice president of strategic alliances Robert O’Hara said.
The refinance calculator is a simple yet effective tool enabling credit unions to recapture auto loans lost to their competitors by showing their members how much they can save by refinancing with them. As vehicle sales continue to set records with 85 percent of vehicles financed, O’Hara insisted consumers are eager to lower their monthly financial burden, and refinancing fits this need.
“How do they connect with their members to educate them on the benefits of refinancing? Pushing this refinance tool on the GrooveCar platform allows credit unions to engage more members while providing them a visual on how refinancing benefits them,” O’Hara said.
“The more a credit union can address their members' ‘what’s in it for me’ thought process, the greater success they will have in recapturing these loans,” he continued.
“The platform will always change to bring in new features designed to reach members and bring the convenience of purchasing a vehicle more engaging than ever,” O’Hara went on to say. “To that end, we have designed an area of the site for credit unions to customize incentives they wish to have members take advantage of.
“It’s all about options, and the auto buying platform strives to meet the members' and credit unions' wants and needs on all levels,” O’Hara added.
RouteOne recently made a series of personnel moves aimed at further developing, strengthening and diversifying enterprise perspectives to best serve its customers who leverage its comprehensive platform of F&I solutions including digital retail, credit application, eContracting and compliance.
RouteOne highlighted that in each of their respective roles, Jeff Belanger, Amanda George and Scott Johnsen have continually executed on the company’s key values, which include integrity, teamwork, service, organizational excellence, financial stewardship and respect.
“It’s these values that help RouteOne deliver the technology thousands of dealers and finance sources rely on to sell and finance vehicles across North America,” the company said.
Belanger assumed the role of vice president of national business development and is responsibile for the company’s dealer sales and training teams. Belanger has dedicated more than 13 years to RouteOne in his previous roles in operations, project management, product development, and finance source business development.
Prior to arriving at RouteOne, Belanger held various roles in the finance industry. The focus of his new position will be to maintain the highest levels of dealer satisfaction while continuing to grow the RouteOne dealer network and streamline the F&I process for dealers.
George took the role of vice president of finance source development with responsibilities for RouteOne’s finance source sales and integrations teams. Like Balanger, George also has been with RouteOne for more than 13 years in her previous roles in operations, project management, product development and dealer business development.
Prior to her time at RouteOne, George held various roles in the management consulting industry. The objectives of her new position will be to manage the support and growth of finance source partners and drive market adoption of technology that streamlines the financing process.
Johnsen accepted the role of vice president of customer strategy with the responsibility of supporting key accounts and automotive OEM customers.
Johnsen has been with RouteOne for more than year in his previous roles in product development, dealer business development, and finance source business development. Previoulsy, he held various roles in automotive retail sales and automotive indirect finance source sales, and he is a former U.S. Marine.
The focus of Johnsen’s new assignment will be to gather, define and clarify the insights that drive RouteOne’s creative solutions and help make a difference in its clients' business.
“RouteOne is dedicated to providing the vehicle financing industry with innovative technology solutions backed by outstanding customer support,” RouteOne chief executive officer Justin Oesterle said.
“I am excited by these new leadership appointments and confident that our team will continue to deliver on those objectives and serve our rapidly evolving industry and customers with excellence,” Oesterle continued.
Oesterle reiterated that RouteOne was founded with the goal of providing systems and services of choice to dealers and finance sources in the vehicle financing industry, while delivering the best-in-class service its customers deserve and have come to expect.
“With this transition, customers can continue to expect the highest level of service from the entire RouteOne team,” the company said.
With used-vehicle financing leading the charge, Experian’s latest State of the Automotive Finance Market report showed finance companies booked significantly more contracts with super-prime customers during the second quarter than they did with deep subprime consumers.
Creating what analysts called steady growth and remarkable stability quarter-over-quarter, the second-quarter report released on Tuesday indicated that auto finance companies made more than five times as many loans to super-prime customers (17.9 percent of total auto loans and leases) as to deep-subprime customers (3.5 percent of total auto loans and leases).
That influx of higher-grade paper meant the combined subprime and deep-subprime share of new- and used-vehicle loans and leases dropped from 23.3 percent in Q2 2015 to 22.8 percent in Q2 2016, according to Melinda Zabritski, senior director of automotive finance for Experian.
“Automotive lenders seem to be keeping cool heads when it comes to how much risk they are willing to take with subprime and deep-subprime customers,” said Zabritski, who is coming back to the SubPrime Forum at Used Car Week for the fourth consecutive year to share more data and trends.
“Yes, subprime and deep-subprime loans are growing, but the entire market is growing from a volume perspective across all risk tiers,” she continued. “In fact, the subprime loans have actually dropped as a percentage of the total market. That, combined with only a slight uptick in delinquencies, makes clear that the sky is not falling.”
Experian determined 30-day delinquencies inched up just 3 basis points year-over-year from 2.19 percent in Q2 2015 to 2.22 percent in Q2 2016. Meanwhile, Experian found that 60-day delinquencies moved just 6 basis points higher from 0.56 percent to 0.62 percent in the same time period.
“Fear of an impending automotive subprime bubble has been swirling around the industry since the recovery from the Great Recession,” Experian said. “Those fears haven’t come to fruition.”
Overall, Experian reported that finance companies held $1.027 trillion in outstanding balances through the second quarter; that’s up from $932 billion a year earlier.
Each of the four major categories of providers that Experian designates posted year-over-year gains in outstanding balances. Those four categories include commercial banks (up by $27 billion), captives (up $13 billion), credit unions ($33 billion) and finance companies that do not hold deposits and often take on subprime risk (up $21 billion).
More used paper in portfolios
Experian highlighted used-vehicle loans grew to record heights in terms of average dollar amount and overall loan share during the second quarter.
The average used vehicle loan reached an all-time high of $19,101 in Q2, up from $18,671 in Q2 of last year.
Used-vehicle contract volume also reached a new peak, accounting for 55.61 percent of all vehicle loans during the second quarter.
Analysts noticed the growth was driven by jumps in prime and super-prime consumers choosing used vehicles. Specifically, 43.3 percent of super-prime consumers selected a used vehicle, which represents a 10 percent increase over 2015. For prime consumers, 59.9 percent chose used, a 6.6 percent increase over the previous year.
This shift also helped push the average credit score for a used vehicle loan from 645 in Q2 2015 to 648 in Q2 2016.
“One of the biggest trends we continue to see is the shift to used vehicles by customers with excellent credit,” said Zabritski, who will appear during the SubPrime Forum, which runs Nov. 14-16 at the Red Rock Resort and Casino in Las Vegas.
“As vehicle prices continue to rise, savvy consumers are looking for ways to control costs. That appears to be pushing more customers toward used vehicles,” she went on to say.
Other Q2 2016 findings:
• The average monthly payment for a used vehicle was $364, up from $361 in Q2 2015.
• The average monthly payment for a new vehicle loan was $499, up from $483 in Q2 2015.
• The average new vehicle loan amount was $29,880, up $1,356 from the Q2 2015 average new vehicle loan amount of $28,524.
• Average customer credit scores for new vehicle loans fell slightly, from 709 in Q2 2015 to 708.
• The average loan term for a new vehicle went from 67 months in Q2 2015 to 68 months.
Dealertrack and F&I Express recently strengthened their partnership through the introduction of the latter's Express Recoveries Solution. The offering provides finance companies and consumers a refund of the unused portion of their aftermarket contracts.
The service will be available through Dealertrack to finance companies on Oct. 1.
“The Express Recoveries Solution will expand Dealertrack’s offering to its more than 6,800 lenders, helping to bring aftermarket providers and lenders together and facilitate the management of aftermarket recoveries for dealerships,” said Mark Furcolo, senior vice president of lender solutions at Dealertrack.
“The integration of Express Recoveries Solution will help lenders and dealers strengthen their relationship when it comes to aftermarket recoveries to consumers. This will ultimately enable better workflow and greater efficiencies, much needed in today's dealerships,” Furcolo continued.
In addition, Dealertrack and F&I Express will join forces to provide dealerships with additional access to F&I product providers through the Dealertrack platform through Dealertrack eMenu and the Dealertrack Aftermarket Network.
Through this workflow on Dealertrack, dealers can access product rates, generate contracts and remit contracts to the providers.
In the coming months, Dealertrack will provide more information about when providers and their rates will be added to the Dealertrack Aftermarket Network.
“Our aligned vision to provide powerful, innovative solutions to dealers to enhance workflow is a primary reason why we feel so strongly about our partnership with Cox Automotive, and expanding our relationship with Dealertrack is an important aspect of that,” said Brian Reed, president and chief executive officer of F&I Express.
“To include our award-winning Express Recoveries Solution on Dealertrack’s platform means lenders have increased and improved access to F&I providers for product cancellations,” Reed went on to say.
The National Automotive Finance Association and the American Financial Services Association on Thursday announced the availability and launch of the 2016 Non-Prime Automotive Finance Survey.
For 20 years the NAF Association has produced a report of the nonprime auto financing market. NAF Association leaders partnered with AFSA for the second year to conduct the broadest survey of the non-prime auto-financing marketplace. Through the combined efforts of both associations, 50 companies contributed to the survey to produce the most comprehensive study of the industry ever compiled.
“More and more companies are relying on the survey as a benchmarking tool to measure their company’s performance and to identify industry trends,” NAF Association executive director Jack Tracey said. “The metrics can also be useful in explaining a company’s policy decisions to regulators.
“This broad base of contributing finance company data provides an accurate and unbiased view of the industry,” continued Tracey, who again will be part of the SubPrime Forum during Used Car Week on Nov. 14-16 at the Red Rock Resort and Casino in Las Vegas.
The increased participation in the 2016 Non-Prime Survey represents an outstanding principal exceeding $34 billion (year end 2015).
Below is an example of the key market trends, performance evaluations, statistical analysis, comparison and benchmarking included in survey:
• Market growth
• Competition
• Market share
• Dealerships network
• Risk indicators
• Credit scores
• Payment to income ratios
• Average loan rates
• Delinquency
• Repossession rate
• Net charge-off rate
• Average amount financed
• Contract terms
• Operating expenses
• Profitability
The survey is being distributed at no cost to NAF Association and AFSA member companies that participated. For other companies interested in the survey, the cost is $500 and it can be ordered online here.
Reynolds and Reynolds recently released the Reynolds LAW F&I Library to help dealerships in three more states.
The comprehensive catalog of standardized, legally reviewed finance and insurance (F&I) documents now can be used by dealers throughout Wyoming, Hawaii and Indiana.
“Dealers will continue to face growing expectations from consumers for a more engaging and smoother car-buying experience,” said Jerry Kirwan, senior vice president and general manager of Reynolds Document Services.
Using standard documents written in consumer-friendly language can help to create a clearer, more consistent, and more efficient F&I process for the F&I manager and for the consumer,” Kirwan continued. “And, because of those improvements to the overall F&I process, the overall consumer experience with the dealership can be improved.”
Kirwan also noted that because regulatory scrutiny is an ongoing concern for dealers, the LAW F&I Library is a tool to help dealers meet compliance obligations and manage risk. The documents in the library are regularly reviewed for legal sufficiency with the latest automotive regulations by Reynolds' industry-leading forms specialists alongside Reynolds' outside legal partners.
The printed documents in the LAW F&I Library also are available in a digital format, which can help facilitate the conversion to laser-printed transactions and e-contracting. Reynolds Document Services maintains licensing agreements with all major providers of electronic F&I (e-F&I) solutions.
Now along with Wyoming, Hawaii and Indiana, Reynolds has libraries for:
— Alabama
— Arizona
— Arkansas
— California
— Colorado
— Idaho
— Illinois
— Kentucky
— Louisiana
— Maryland
— Massachusetts
— Michigan
— New Jersey
— New Mexico
— North Carolina
— Ohio
— Oregon
— Pennsylvania
— Tennessee
— Texas
— Virginia
— Utah
— Washington
— West Virginia
