Subprime auto finance company Exeter Finance Corp. announced today that Tom Anderson has resigned from his role as chief executive officer and as a member of the board of directors to pursue other interests.
Mark Floyd, a member of Exeter's board of directors who formerly served as Exeter's CEO and co-chief operating officer at AmeriCredit has been appointed interim CEO.
It’s only been a little more than a year since Floyd stepped down from his executive role and Anderson came into the picture.
“I would like to thank Tom for his leadership during a crucial time for Exeter when the company consolidated its originations platform and streamlined its operations, resulting in a much more efficient company with rapidly increasing profitability,” said Martin Brand, chairman of Exeter's board of directors. “We are excited about Exeter and its prospects and thank Tom for his leadership.
“We are also grateful that Mark Floyd has agreed to come back from retirement and step in as interim CEO,” Brand continued. “Mark is a highly respected executive with extensive industry experience in auto finance. His strong track record and previous tenure as CEO make him an ideal and natural choice for interim CEO.”
Exeter previously highlighted that Anderson came to the company as a seasoned executive with nearly three decades of management and financial services industry experience. Anderson served in a variety of leadership and CEO roles at leading global organizations, including Capital One, Amerifee, Upromise, Sallie Mae, Integrity Interactive, and Education Dynamics.
"It is hard for any company to transition from a start-up to high growth to a professional organization,” Anderson said. “I am happy to have contributed to that evolution.”
But now Floyd is back at the controls of Exeter, which recently executed a $300 million securitization backed by automobile loan receivables.
“During my over five years as an executive and member of the Exeter board, I have had the privilege of serving the company as it has evolved into a major player in the auto finance industry,” said Floyd, who also is the current president of the National Automotive Finance Association.
“I look forward to working with Exeter's deep and experienced leadership team as we continue that evolution. I am fully committed to ensuring a seamless transition and continuity in leadership,” he went on to say.
Dealers can now apply and be approved for access to Equifax consumer insights data in a matter of hours thanks to a new, streamlined onboarding platform released on Monday.
Leveraging technologies from DocuSign and Salesforce.com, along with its own proprietary technology and process innovation, Equifax insisted that it helped to transform dealer credentialing from a long, paper-intensive procedure spanning several days or weeks into a more seamless, all-digital transaction that delivers approvals within hours of receiving the necessary documents from dealers.
This self-service platform utilizes Equifax’s own commercial credit decisioning service, BusinessConnect, to help automate data gathering and security credentialing.
This process can accelerate overall onboarding cycle time by reducing the amount of data required, as well as the time applicants spend inputting application information.
BusinessConnect is built on the Salesforce.com platform, and is a cloud-based commercial credit and collections application available for purchase through the Salesforce App Exchange.
“This represents a complete overhaul of the traditional manually intensive auto dealer onboarding process,” Equifax senior vice president of operations Patricia Rosenfeld said.
“We continually look for ways to help improve the customer experience, and we are particularly pleased about the dramatic improvements we’ve made in the credentialing process, which will directly benefit auto dealers and customers alike,” Rosenfield continued.
Equifax explained that the process is further simplified by giving the applicant the ability to send and sign documents online utilizing DocuSign.
In addition to helping eliminate the hassles, costs and often lack of security in printing, faxing, scanning and overnighting documents to complete transactions, DocuSign helps can enable dealers to track the status of their applications quickly and easily at any point in the process.
Officials indicated document transactions are performed often in minutes, with fewer errors, and usually on the first try. Agreements are then retained in and easily accessible from the DocuSign cloud.
“The most successful auto dealerships will be fully digital by the end of the decade so they can meet consumer expectations of a fast, easy and secure experience that mirrors how they do business in today’s mobile world,” said DocuSign vice president of business development Glenn Griffin.
“We’re thrilled to see how Equifax has leveraged DocuSign’s Digital Transaction Management (DTM) platform and eSignature service to help automate paper-based processes, accelerate auto dealer onboarding, and improve the experience for dealers, employees and customers alike,” Griffin added.
Equifax also mentioned the portal also was designed with the mobile user in mind. Applications can be submitted and tracked via virtually any mobile device.
“We are putting more control of the application and credentialing process back into the hands of the auto dealer,” said Equifax vice president of commercial sales Scott Spencer.
“Leveraging our cloud-based credit platform BusinessConnect, this all-digital, straight-through process allows them to gain access to Equifax products quickly, so they can help grow their business profitability while assuming a sustainable level of risk,” Spencer went on to say.
Veteran F&I managers might remember a time when stretching terms beyond 36 months to complete the financing for a used-vehicle installment contract seemed outlandish. Now getting deals bought and used models delivered with terms double that term length is more commonplace.
In its Q3 Used Vehicle Market Report, Edmunds.com provided further evidence to the degree longer terms are prevalent.
“Higher vehicle values have caused a dramatic shift in the way that consumers finance,” analysts said. “In order to keep monthly payments at manageable levels the trend toward loans over five years is now the norm.
“Comparatively, five years ago these loans only represented 40 percent of the business but in today’s market they are the majority at 65 percent,” they continued.
The report contain comparisons between payment and term metrics Edmunds pinpointed for this year to show the expansion from 2010. Here is the breakdown:
Average Monthly Payment by Term Length
Used Term
(months) |
2010 |
2015 |
2015 vs. 2010 |
| 1-12 |
$422 |
$374 |
-11.3% |
| 13-18 |
$275 |
$241 |
-12.4% |
| 19-24 |
$440 |
$380 |
-13.6% |
| 25-30 |
$289 |
$278 |
-3.7% |
| 31-36 |
$339 |
$327 |
-3.5% |
| 37-42 |
$321 |
$299 |
-7.0% |
| 43-48 |
$316 |
$308 |
-2.5% |
| 49-54 |
$327 |
$319 |
-2.6% |
| 55-60 |
$347 |
$345 |
-0.7% |
| 61-66 |
$369 |
$351 |
-4.9% |
| 67-72 |
$387 |
$397 |
2.4% |
| 73-84 |
$398 |
$409 |
2.7% |
| Average |
$360 |
$375 |
4.1% |
“Lower interest rates and increased terms has made monthly payments at nearly all term lengths lower than 2010 levels,” analysts said. “However, we are seeing an increase in monthly payment for those loans with the longest terms.
“The higher concentration of longer terms loans has brought up the monthly payment average to $375 from $360 in 2010,” they added.
Ally Financial announced this week that the finance company now will have full eContracting capabilities available to dealers nationwide through RouteOne’s indirect auto financing platform.
Executives explained the solution can provide retail contract validation, signature and distribution — all done electronically. It is supported by open integrations to leading dealer management system (DMS) providers in the U.S. dealer market.
“We are pleased to have Ally become part of eContracting on RouteOne,” RouteOne chief executive officer Mike Jurecki said.
“The availability of leading financial sources, like Ally, further drives the adoption of eContracting by dealers, and enhances the entire vehicle purchasing journey for all parties involved: Dealers, finance sources and customers,” Jurecki continued.
Jurecki went on to emphasize RouteOne has a long and proven track record with eContracting. Its volume more than doubled in 2014 and by the close of 2015, is on target to exceed 4.5 million eContracts booked since inception.
The company added momentum continues to accelerate, due to strong participation by finance sources and a growing list of more than 5,000 dealers, with coverage in all 50 states.
Growth is further building because dealers can easily leverage their current DMSs and other DSPs in support of the eContracting process through open integrations to the RouteOne platform.
Furthermore RouteOne eContracting can provide compliance auditing throughout the entire contracting life-cycle and a flexible, consumer-friendly signing process that can be done using signature pads, tablets, or nearly any touch-screen device.
The addition of Ally to eContracting through RouteOne’s platform is designed to reflect Ally’s digital capabilities and commitment to an industry that is shifting toward a digital marketplace.
“eContracting provides a variety of benefits to our dealers and streamlines the transaction for the consumer,” said Tim Russi, president of auto finance at Ally.
“Ally continues to invest in our technology to provide dealers the tools for faster funding and increased customer satisfaction,” Russi added.
Dealers and finance sources interested in eContracting can contact RouteOne at (866) 768-8301.
The combination of investor money and an online platform created by what the company calls an “A team” of industry veterans who have collectively more than 110 years of experience in automotive, below-prime automotive finance, billions of dollars of securitization execution and asset performance management generated a new website — SpringboardAuto.com.
On Wednesday, the site founders Jim Landy and Stuart Holmes described SpringboardAuto.com as a new direct-to-consumer auto loan platform that “completely reinvents the auto lending experience.”
SpringboardAuto.com originates and services loans for institutional investors. Providing an alternative to investors purchasing prime unsecured assets, SpringboardAuto.com offers loans to below-prime borrowers that are secured by a high utility asset.
Based in Irvine, Calif., the company is set to launch the new auto loan service early next year. SpringboardAuto.com is designed to enable consumers to refinance existing auto loans, or finance the purchase of a new or used vehicle directly online or via a smartphone, leveraging data and analytics to facilitate a fast, convenient, and transparent online loan process.
SpringboardAuto.com founders insisted that their new site can provide benefits for all stakeholders:
1. Consumers
Unlike other models that seek to monetize the loan applicant via the dealership, SpringboardAuto.com is designed to put the consumer in control and at the center of the loan process, offering faster decisions and online tools.
“SpringboardAuto.com will ultimately deliver a better consumer experience,” officials said.
“Consumers will have insight into information they may not otherwise be privy to in other lending models,” the continued. “Consumers will see how choices they make as they configure their loan, in variables such as loan term and reduced sale price, effect their overall final loan obligation.
2. Private Party Sellers/Buyers
The founders explained SpringboardAuto.com’s platform can bridge existing process challenges with private party transactions by enabling buyers and sellers to securely and easily transact and close their vehicle purchase and sale within the website.
“This includes everything from financing and inspections to DMV paperwork,” they said.
3. Dealers
Officials added that SpringboardAuto.com can fund loan applicants for a specific vehicle and funnel the qualified customer directly to the dealership at no charge.
“Even with lost rate mark-up, this transaction is a much more efficient below prime transaction for dealers when you account for the elimination of any lender fees, discounts and lead fees,” the founders said.
“The SpringboardAuto.com process will reduce the hours typically spent with subprime customers,” they added.
According to the recent Car Buyer of the Future study by Autotrader, nearly three-fourths of consumers want to complete credit applications and financing paperwork online. Among the key factors driving this trend is a desire to save time at the dealership and have less pressure while filling out paperwork.
Furthermore, a recent study from PriceWaterhouseCoopers showed that the overall experience — including speed, transparency and customer service — often trumps interest rate as a consumer’s biggest consideration when choosing a lender.
“The market for auto loans has changed dramatically over the past few years, yet auto lenders have not kept up with today’s consumer demands, especially those of the technical-savvy millennials who live and breathe on their smartphones and account for 37 percent of all funded auto loans,” said Landy, who is chief executive officer of SpringboardAuto.com.
“In general, borrowers, especially those with less than perfect credit, are incredibly dissatisfied with the opaque and frustrating car-financing process. Our mission is to change that.”
Holmes also reiterated how the site is geared to benefit its users
“Our goal is not to simply digitize the same old process; instead, our platform, which is fully mobile optimized, will speed it up by reducing redundant data and endless document requests — all while minimizing potential impact on an applicant’s credit score,” said Holmes, chief marketing officer of SpringboardAuto.com.
“And, ultimately, the entire process will happen easily and efficiently — from loan, to trade-in, to final purchase — for both private party and dealer purchase,” Holmes went on to say.
Auto Financial Group — an online provider of innovative financing products including CarMark Auto Finance for credit unions and banks — announced year-to-date growth figures this week, revealing increasing momentum in new customer signings with AFG’s balloon lending and remarketing programs.
Since August, Auto Financial Group highlighted that it has signed nine new credit unions to their Balloon Lending program, resulting in a reach increase of more than 185,900 new consumers. These new organizations include:
— Align CU
— Anoka Hennepin Credit Union
— Arlington Community Federal Credit Union
— BrightStar CU
— Education First CU
— Hialeah Municipal Employees FCU
— Jamestown Area Community FCU
— MOBILITY CU
— Vermont FCU
The company tabulated that these credit unions represent combined assets of more than $2 billion through institutions located across Florida, Massachusetts, Minnesota, New York, Texas, Vermont and Virginia.
“We welcome these financial institutions to the growing AFG family," AFG chief executive officer Richard Epley said. "Residual based financing is at an all-time high in the U.S., and we're excited that these institutions have chosen AFG’s Balloon Lending Program to offer to their members."
In addition, Auto Financial Group has signed four new credit unions as remarketing partners, resulting in a reach increase of more than 579,000 new consumers. These new remarketing partners, representing combined assets of more than $3.9 billion, include:
— Intouch Credit Union
— Municipal Credit Union
— My Community Federal Credit Union
— Smart Financial Credit Union.
Auto Financial Group expects continued growth through the remainder of 2015, leading into a strong 2016 as the company seeks to provide their unique financing products and solutions to financial institutions across the U.S.
The balloon lending program, such as CarMark Auto Finance, can provide institutions with a residual based balloon loan program that is fully insured.
Through AFG's software, financial institutions are able to secure higher-yielding loans with lower monthly payments for their consumers, mitigate residual value risk, and position themselves to take advantage of the record market increases in residual value based financing.
Equifax highlighted the total amount of subprime auto loans originated through August and connected to consumers with an Equifax Risk Score below 620 totaled $75.8 billion, representing a 12.6-percent increase year-over-year.
In an effort to help dealerships and finance companies generate the most gross from that activity, ProMax Unlimited chief executive officer John Palmer again pinpointed what his company spotted as the top grossing vehicles purchased by subprime customers.
In the lists below, Palmer noted the top 20 highest grossing vehicles in three different subprime credit tiers. Vehicles are ranked in order of total units sold, not total gross.
Again through the first eight months of 2015, Equifax reported 4.2 million vehicle installment contracts have been originated with subprime customers, constituting about 22 percent of the entire market.
Equifax also mentioned the average subprime loan amount was $18,358. So what vehicles might be tied to those contracts? Here’s what ProMax Unlimited noted as what generated significant gross:
Credit Tier 575-619
1. 2013 Ford Fusion: $2,762.57
2. 2013 Chrysler 200: $2,852.49
3. 2013 Hyundai Sonata: $2,804.28
4. 2014 Ford Fusion: $3,544.28
5. 2013 Ford Focus: $2,067.39
6. 2013 Kia Optima: $3,119.98
7. 2014 Chrysler 200: $2,628.20
8. 2013 Ford Escape 4WD: $2,468.58
9. 2012 Ford Focus: $2,229.13
10. 2014 Chevrolet Malibu: $3,885.05
11. 2014 Ford Focus: $3,266.67
12. 2014 Nissan Altima: $2,664.42
13. 2012 Chevrolet Cruze: $2,962.98
14. 2014 Nissan Sentra: $3,857.59
15. 2014 Chrysler Town & Country: $2,949.67
16. 2014 Toyota Camry: $2,041.25
17. 2013 Chevrolet Cruze: $3,401.81
18. 2014 Dodge Avenger: $1,973.59
19. 2013 Hyundai Elantra: $1,791.21
20. 2013 Nissan Altima: $3,338.20
Credit Tier 520-574
1. 2014 Nissan Altima: $1,820.69
2. 2013 Chrysler Altima: $2,318.63
3. 2013 Nissan Altima: $2,942.28
4. 2013 Hyundai Elantra: $2,969.28
5. 2013 Ford Focus: $2,008.06
6. 2014 Toyota Corolla: $3,098.87
7. 2014 Chrysler 200: $3,011.21
8. 2014 Chevrolet Malibu: $3,560.13
9. 2014 Hyundai Elantra: $1,737.73
10. 2013 Chevrolet Malibu: $2,386.53
11. 2013 Ford Fusion: $2,283.80
12. 2013 Dodge Avenger: $3,665.44
13. 2011 Chevrolet Malibu: $3,678.63
14. 2013 Kia Optima: $2,462. 78
15. 2013 Hyundai Sonata: $2,263.89
16. 2012 Chevrolet Cruze: $2,094.76
17. 2013 Chevrolet Cruze: $2,030.65
18. 2014 Ford Fusion: $3,886.30
19. 2014 Hyundai Sonata: $2,609.02
20. 2015 Chrysler 200: $2,737.01
Credit Tier 460-519
1. 2014 Nissan Altima: $2,667.03
2. 2013 Chrysler 200: $1,943.10
3. 2012 Ford Fusion: $2,169.29
4. 2013 Dodge Avenger: $2,195.23
5. 2014 Ford Focus: $2,434.97
6. 2014 Toyota Corolla: $4,417.06
7. 2014 Toyota Camry: $2,597.46
8. 2013 Ford Focus: $2,054.46
9. 2013 Ford Fusion: $380.93
10. 2013 Hyundai Sonata: $3,203.64
11. 2014 Ford Fusion: $3,705.82
12. 2012 Nissan Altima: $2,764.92
13. 2014 Hyundai Accent: $2,018.15
14. 2014 Hyundai Elantra: $1,803.21
15. 2012 Toyota Camry: $4,433.47
16. 2014 Chevrolet Malibu: $3,383.28
17. 2013 Kia Optima: $2,683.04
18. 2014 Chrysler 200: $1,855.63
19. 2014 Dodge Charger: $1,764.83
20. 2012 Nissan Sentra: $3,122.84
Santander Consumer USA appointed a new chief financial officer on Monday; an executive who will take on the role starting Dec. 16.
Replacing interim CFO Jennifer Davis, who will continue to serve as deputy chief financial officer is Ismail “Izzy” Dawood. Davis held the post on interim basis since July.
Prior to joining the SCUSA, Dawood served as executive vice president and chief financial officer of the investment services division of The Bank of New York Mellon Corp. He also served BNY Mellon as executive vice president and director of investor relations and financial planning and analysis, and as senior vice president and global head of corporate development and strategy.
Prior to his tenure at BNY Mellon, Dawood held various senior roles at Wachovia Corp., including managing director of structured treasury activities and managing director of corporate development.
“We are extremely pleased to have Izzy Dawood join the SC team, where he will make a tremendous impact,” Santander Consumer USA chief executive officer Jason Kulas said.
“Izzy’s broad and deep experience in financial services, investment banking, capital markets, strategic planning and leading a publicly traded company will be critically important as SC continues to focus on driving shareholder value and delivering superior service to customers,” Kulas continued.
Dawood holds a master's degree in business administration from the Wharton School of Business and a bachelor's degree in finance from St. John’s University. Dawood is a chartered financial analyst, and is a member of the boards of directors of Promontory Interfinancial Network and Leadership Pittsburgh.
As captive activity also registered gains, Experian Automotive highlighted on Wednesday that what it classifies as finance companies — institutions that don’t hold customer deposits but get most of their business from consumers with subprime and deep-subprime credit — gained a healthy amount of market share year-over-year during the third quarter.
According to the Q3 2015 State of the Automotive Finance Market report, finance company market share reached 13.34 percent in Q3, up 6.4 percent from the previous year.
Meanwhile, Experian indicated one of the biggest shifts in the automotive lending industry during Q3 was the resurgence of captive lenders — the lending companies owned by vehicle manufacturers.
In the third quarter, captive lenders financed 51.6 percent of new-vehicle loans, up from 36.8 percent in Q3 2011. This gain represents the largest market share of new-vehicle financing for captives since the recession.
Market share findings for other lending types show commercial banks still holding the largest share for new and used vehicle loans combined, at 34.7 percent.
“Captive lending has made a comeback since suffering a steep drop-off caused by declining new sales and lender-type shifts during the recession,” said Melinda Zabritski, Experian’s senior director of automotive finance.
“This is good news for manufacturers, as their captive finance companies often provide an additional source of revenue as well as a strong pipeline to credit for their dealer networks,” Zabritski continued
Experian mentioned five other interesting findings from its Q3 data, including:
• Consumers continue to rely on financing; the percentage of new vehicles financed reached an all-time high of 86.6 percent.
• The average credit score for a new vehicle loan fell to 710, the lowest since Q3 2007.
• During Q3, the average monthly payment for a new vehicle was $482, up $12 from the previous year.
• The average monthly payment for a used vehicle reached $361, an increase of $3 from a year ago.
• The average interest rate for a new vehicle hit 4.63 percent, while the average interest rate for a used vehicle reached 8.76 percent.
More leasing as contract terms lengthen
Experian has never seen this many new models roll over the curb connected to a lease.
Zabritski indicated leasing accounted for nearly 27 percent of all new-vehicle transactions in Q3, up from 24.7 percent the previous year. This level marks the highest percentage of vehicles leased since Experian began tracking the data publicly in 2006.
Findings from the report also showed that the average monthly lease payment was $398 during the quarter, up $1 from a year ago.
“As the price for a new or used vehicle continues to rise, leasing has become a more viable financing option for consumers looking to maintain an affordable monthly payment,” Zabritski said.
“While consumers can save an average of $84 per month by leasing rather than taking out a loan on a new vehicle, they should make sure leasing fits their lifestyle,” she continued. “Oftentimes there are mileage caps and other considerations that consumers should familiarize themselves with before entering into a leasing agreement.”
Rising vehicle prices also have given way to record loan amounts for new and used vehicles.
During the third quarter, the average amount financed for a new vehicle was $28,936, up $1,137 from the previous year.
The average amount financed for a used vehicle was $18,866, up $290 over the same time period.
Furthermore, Experian pointed out the gap between new and used loan amounts also has grown. On average, consumers finance $10,070 less on a used vehicle than on a new one.
Extending loan terms is another method consumers turned to in order to keep monthly payments low. During Q3, Experian determined the percentage of consumers who took out new and used vehicle loans with terms between 61 and 72 months reached all-time highs.
For new vehicles, approximately 44 percent took out 61- to 72-month loans, and more than 41 percent financed a used vehicle for the same duration.
Analysts noticed the percentage of consumers extending their loans even longer also has increased.
Loans for new vehicles extending 73 to 84 months increased 17.1 percent over the previous year, reaching a Q3 record high of 27.5 percent.
Used-vehicle loans extending in the 73- to 84-month term, however, reached an all-time high of 16.2 percent (a 12-percent increase over the previous year).
Seen as the raw material to generate more originations, Consumer Portfolio Services announced this week that it has entered into a new two-year revolving credit agreement with Credit Suisse AG and Ares Agent Services.
Executives indicated loans under the new credit agreement will be secured by automobile receivables that CPS now holds or will purchase from dealers in the future. They noted CPS may borrow on a revolving basis through November 2017, after which the company will have the option to repay the outstanding loans in full or to allow them to amortize for a further two-year period.
“We are pleased to have established this new facility and to have forged new relationships with partners such as Credit Suisse and Ares,” CPS president and chief executive officer Brad Bradley said.
“With this transaction, we now have three revolving credit facilities with aggregate capacity of $300 million, paving the way for future growth in originations volume,” Bradley added
During the third quarter, CPS purchased $287.5 million of new contracts, an increase of 2.9 percent, compared to $279.3 million during the third quarter of last year.
The company’s managed receivables totaled $1.941 billion as of Sept. 30, an increase from $1.822 billion as of June 30 and $1.519 billion as of the end of last year’s third quarter.
