Late last week, RouteOne announced that C&F Finance Co. is now an available e-contracting finance source for dealers utilizing the RouteOne platform.
The move was made in an effort to augment the digital exchange of critical contract documents and data between dealers and finance sources to increase efficiency and reduce contracts in transit.
C&F Finance, headquartered in Richmond, Va., is a leader in indirect auto financing, providing vehicle finance in multiple states throughout the U.S. Officials highlighted C&F benefited from a streamlined technical implementation process due to the e-contracting certification that its loan origination system (LOS), defiSOLUTIONS, had previously undergone with RouteOne.
“We are excited about partnering with RouteOne and offering e-contracting to our dealers,” C&F Finance executive vice president and chief credit officer Shawn Moore said.
“Cutting down funding time and gaining efficiencies will greatly add value to our funding processes,” Moore continued. “We’re certain our best in class service will be further enhanced with this feature.”
RouteOne is one of the industry leaders in e-contracting, booking more than 10 million e-contracts to date. RouteOne has more than 7,200 active e-contracting dealers and more than 50 finance sources in its rapidly growing e-contracting customer base.
“We strive to continually deliver our customers solutions that streamline and solve challenges in the auto finance industry,”, RouteOne chief operating officer Brad Rogers said. “e-contracting is a solution that benefits all parties involved: dealer, finance source and consumer.
“C&F Finance is a welcome addition to our e-contracting platform, and we are pleased to offer their services to our dealer base,” Rogers went on to say.
Dealers interested in e-contracting should contact their RouteOne business development manager at (866) 768-8301 or www.routeone.com/salesteam.
Now all three major credit bureaus have made a move to bolster their offerings within the alternative-data space.
On Monday, Equifax announced that it has acquired DataX, a leading specialty finance credit reporting agency and alternative data provider to finance companies nationwide.
Through DataX, Equifax highlighted that it can help finance companies expand credit access and broaden financial inclusion for more consumers, specifically in underbanked populations. DataX’s data assets complement the Equifax core credit database adding alternative credit and payment data, analytics and identity solutions on underbanked consumers to the installment loan, rent-to-own and lease-to-own markets.
Additional offerings include credit reporting, ID verification, bank account verification and custom risk services.
“Giving consumers fair access to credit has always been a key economic driver for upward mobility, and this acquisition will help more consumers gain access to credit and capital,” said Trey Loughran, president of United States information solutions at Equifax.
“The combination of DataX’s data with Equifax’s unique and robust data assets will add more depth to consumer’s profiles and will help lenders expand borrowing options,” Loughran continued.
Loughran went on to note that the acquisition of DataX complements other unique Equifax data assets that help provide greater depth and reach to those seeking credit such as The Work Number, one of the nation’s largest centralized repository of payroll data, managed by Equifax.
“Only 39 percent of Americans are able to cover a $1,000 emergency expense, which means the majority of people at some point will need some type of financial assistance,” said Jon Geidel, president of DataX.
“For more than 14 years, DataX’s mission has been to support our partners to find more reasons to include underbanked consumers. Joining Equifax complements our mission and affords consumers better access to the credit they deserve to meet their financial needs,” Geidel went on to say.
DataX and its employees are now part of the Equifax Banking and Lending division, according to Monday’s announcement.
The Equifax acquisition continues an alternative-data trend that stretches back to last November when TransUnion purchased FactorTrust.
And this past March, Experian highlighted how the acquisition of Clarity Services expanded its services in the alternative-data space.
Reynolds and Reynolds enhanced its relationship with the Penske Automotive Group this week.
The two companies announced they extended their exclusive agreement for Reynolds to provide the Reynolds Retail Management System to all Penske franchised dealerships in the U.S. and Puerto Rico.
Under the new agreement, Penske intends to integrate electronic document management to improve workflow and efficiency and install the Reynolds docuPAD system in F&I departments across more than 120 Penske dealerships. Reynolds docuPAD system is an interactive tabletop tool designed to engage customers and improve the F&I process by creating a consistent presentation, safeguarding compliance, and improving effectiveness of the F&I process.
“We have had the privilege of doing business with Roger Penske for some 30 years now,” said Bob Brockman, chairman and chief executive officer of Reynolds and Reynolds. “We all take a lot of pride in working with their team, and everyone here is committed to delivering the best possible products, services and results to them.
“The standards they hold are high, and we look forward to the opportunity to continue to meet those standards,” Brockman continued.
Roger Penske, chair and chief executive officer of Penske Automotive Group, shared his reaction about the development.
“We are pleased to extend our relationship with our long-term partner, Reynolds and Reynolds,” Penske said. “The Reynolds Retail Management System is fully integrated into all of our U.S.-based auto dealerships providing our teams with consistency and some of the best products in the industry.
“We look forward to taking the next step with Reynolds as we implement the docuPAD system and working with their team of talented individuals to improve our operations,” he went on to say.
Along with an integration with MaximTrak Technologies, Zurich North America also recently expanded its menu of services for dealers by adding service adviser training resources.
One of the largest providers of F&I products and consultative training for dealerships in the United States, Zurich is collaborating with Steve Shaw, a premier service adviser trainer, to deliver the training.
“We are very excited to expand into the service adviser training arena,” said Vince Santivasi, head of direct markets for Zurich North America. “The service adviser plays a vital role within an auto dealership, and Zurich has recognized a growing demand for consistent service training among our customers.
“This new collaboration with Steve Shaw offers service advisers a consistent process and the necessary tools to help dealerships maximize their profits in the service lane,” Santivasi continued.
Zurich’s service adviser training is designed to help enhance processes, improve repair order performance and motivate service advisers. Training topics to be presented include why customers buy, multipoint inspections selling system, creating presentations and menu selling, among others.
“Working hand-in-hand with Zurich, we are creating more opportunities for dealers to increase the bottom lines of their service centers,” Shaw said. “Dealerships that have fully implemented my training and selling system have seen a typical increase of .2-.5 labor hours per repair order.”
Shaw, author of Master of the Waiting Room, is a professional speaker and trainer to the automotive industry having trained thousands of service personnel over the past 23 years. His service adviser training program is in use by dealerships around the world and has proven to increase service selling power from the entry-level express adviser to the veteran consultant.
The new collaboration provides dealerships a variety of training options including:
— Full day, Zurich-hosted seminars. More than 40 events are already scheduled for 2018 in cities across the U.S.
— One-on-one sessions available in-store and via Skype
— Access to online training modules
While all franchised dealers are able to take advantage of Zurich’s full day seminars and one-on-one sessions, only Zurich F&I customers enrolled in its online training program are able to access the online service adviser modules.
Zurich F&I customers also enjoy reduced pricing on full day, Zurich-hosted seminars and the one-on-one sessions.
“Zurich’s expansion into service adviser training is just the latest offering in our training curriculum,” Santivasi said. “Our customers have asked for multiple training platforms, and we are delivering with in person seminars, on-site in dealership, and online opportunities to add value for our automotive dealer customers.”
To learn the locations and dates of the Zurich-hosted seminars near you, contact your Zurich representative or call (888) 884-7377.
Zurich is one of the largest insurance providers for franchised dealers in the United States and one of the top providers of F&I products and services. Learn more at http://zurichna.com/en/industries/auto/dealerships.
MaximTrak finalizes Zurich North America Integration
In related news, F&I platform provider MaximTrak Technologies recently announced an integration with Zurich North America.
This integration imports Zurich’s F&I product rates and forms into MaximTrak’s ETrak platform to digitize more of the F&I sales process. With this integration, Zurich dealer customers now have access to MaximTrak’s advanced sales systems, MenuTrak and FLITE.
The company explained ETrak is a secure and reliable solution for both the F&I department and customers. It can streamline the contracting process and can eliminate the time, cost and errors associated with paper contracts.
Dealers can now harness the power of Zurich’s interactive sales process while leveraging MaximTrak’s proprietary consumer risk analyzer and intelligent product scoring models. For dealers marketing Zurich’s vehicle protection products, this integration can help F&I managers close deals quickly and efficiently, while also improving the quality of the customer experience.
“The goal of our award-winning digital retail sales and F&I platform is always to bring greater transparency, flexibility, convenience and productivity to the F&I office and, by extension, to dealers’ customers,” said Jim Maxim Jr., president of MaximTrak, a RouteOne company, and chief digital officer for RouteOne. “This new integration with Zurich North America continues our relationship with leading industry technology and service providers to bring more value to auto retailers.”
The MaximTrak platform is deployed domestically and internationally as a turnkey solution for creating engaging selling experiences that yield robust results. The company’s new FLITE ENGAGE, FLITE and a suite of solutions, can interface with RouteOne’s unified, comprehensive digital retailing suite of services that drive state-of-the-art consumer transactional experiences across a broad array of digital properties.
“As digital ecosystems transform the way auto dealers present, sell, and transact, it is imperative that we offer them access to leading F&I digital retail platforms,” said Marie Knight, head of direct markets and programs strategic services for Zurich North America.
“Our integration with MaximTrak will provide our auto dealer customers with advanced systems and interactive sales processes to improve the quality of the F&I customer experience,” Knight continued.
MaximTrak ETrak ca provide an electronic ecosystem that can combine direct provider integrations, indirect provider integrations, and fully managed rates, tables and business rules. These solutions enable dealers to digitize the workflow inside of their F&I office across providers, systems and processes.
The ETrak platform can build complex integration and business layer logic from many product providers into one rating and contracting interface that standardizes the workflow from the point of sale through registration and remittance.
“Now, dealers offering Zurich’s vehicle protection products — who choose to activate MaximTrak’s ETrak under this integration — will reduce customers’ time in F&I by as much as 15 minutes and benefit from an array of new presentation tools,” the company said.
LAUNCHER.SOLUTIONS, a technology provider specializing in subprime auto finance originations, announced a strategic integration partnership with General Forensics with the thought of helping finance companies to operate more intelligently.
Playbook, a General Forensics technology, integrates with LAUNCHER.SOLUTION's appTRAKER Loan Origination System seamlessly, giving finance companies the ability to make more informed collateral decisions and prevent power-booking and price gouging.
Company leaders reiterated appTRAKER Loan Origination System was created by subprime auto finance companies specifically for the subprime space. The integration partnership with General Forensics adds value to the platform by solving a long-standing problem in the industry: power-booking.
Playbook focuses on powerbook monitoring by showing finance companies exactly what collateral they are booking, which prevents over-funding and risky dealership behavior patterns.
“We are excited to have General Forensics as an integration partner,” said Nikh Nath, president of LAUNCHER.SOLUTIONS, “and proud to be able to offer our clients the opportunity to make more informed decisions, resulting in less potential risk for the lender.”
The integration partnership with LAUNCHER.SOLUTIONS gives General Forensics additional opportunity to expand its own presence in the marketplace.
“The Launcher team is a delight to work with. Everyone is sharp and responsive. The whole process of integrating Playbook with their backend was so easy for us,” General Forensics president Josh Wortman said.
Clients of LAUNCHER.SOLUTIONS now have the ability to utilize General Forensics' technology, Playbook, within appTRAKER Loan Origination System. With a clean user interface and intuitive workflow, lender efficiency is increased, yielding a quicker turnaround for their finance products to market.
Nath added that Playbook’s focus on collateral risk management is an integral facet of the automotive lending landscape that should not be ignored by any finance company.
“This integration partnership will prove to be a strong one for not only LAUNCHER.SOLUTIONS and General Forensics, but more importantly for lenders utilizing the systems,” Nath said.
The auto financing process certainly has evolved significantly for the days of paper faxes, but Equifax emphasized that pre-approvals and credit checks remain a critical component of the automotive shopping process.
Equifax unveiled additional analysis in its ongoing study of consumer credit and shopping trends with the goal of gaining a better understanding of how credit is used by a variety of consumers, as well as better understanding consumer buying power.
According to its latest findings, Equifax found prospective purchasers view credit checks and pre-approval processes differently depending on where they are in the buying process.
The findings reveal that 52 percent of prospective purchasers have undergone a credit check, while just 15 percent have the intention of getting pre-approval on their desired vehicle. Even more interesting, nearly a third (32 percent) said they do not plan to seek pre-approval during the shopping process.
Equifax maintains that clearly, dealers and auto finance companies can play a larger role in helping or encouraging more pre-approvals, which may create a less adversarial environment when it comes to negotiation as well as a more expedited shopping process.
Equifax added that another way to foster this environment is through encouraging more shoppers to create online profiles during the research phase of shopping.
“After reviewing these trends more closely, it is clear that there are additional ways dealers and financiers can help their clients move from prospective purchase to completed transaction,” said Rebecca Kritzman, senior director of automotive marketing at Equifax.
“Encouraging the creation of profiles that lead to more customized searches, securing more pre-approvals on credit and offering consultation on buying power can all lead to a higher transaction rate in a less adversarial manner, which can translate to longer satisfied customer relationships in the future.”
Consumers are constantly looking for value when shopping for a vehicle and creating an online profile through a dealer’s online portal helps.
According to the study, approximately 35 percent of consumers who did not create a profile ended up spending more than they expected on their vehicle, compared to 29 percent who said they spent less than what they expected.
Equifax explained online profiles and customized search processes can help consumers navigate to better options that suit their specific needs, helping to build trust with dealers.
Buying power consultation is a critical component in helping consumers complete the auto shopping process.
The study showed men (37 percent) and women (39 percent) who recently completed a purchase said they received consultation on their buying power either before or during the shopping process. This compares to just a quarter of prospective purchasers overall who said they received consultation.
According to confirmation from Fiat Chrysler Automobiles on Friday, how FCA dealers can finance inventory and their retail sales is going to change.
The automaker announced it intends to establish a captive financial services arm to provide U.S. consumers with more options to finance vehicle purchases while supporting the company’s sales volumes and bolstering its earnings.
The currently does not have a captive finance company within its portfolio, even though Chrysler Capital exists. Established more than five years ago, Chrysler Capital is part of Santander Consumer USA.
More than 2.1 million new cars and trucks were sold by FCA in the U.S. last year. FCA said it currently is the only major automaker in the U.S. without a captive financing arm.
“Given our strong financial performance and improving credit profile, we believe the time is right to pursue a U.S. Finco strategy,” FCA chief executive officer Sergio Marchionne said.
“FCA will have adequate capital to fund the equity needed and expects to have the credit rating to make the Finco funding competitive,” Marchionne continued
Chrysler Capital , along with a variety of other providers including Ally Financial, currently underwrites consumer financing for most FCA vehicle purchases in the U.S.
FCA said is exploring whether to acquire an existing financial services business, which could include exercising an option to acquire Chrysler Capital, or to build its own Finco.
Exploratory discussions with Santander regarding Chrysler Capital have begun, according to the company.
Through advancements in machine learning, auto finance companies now have another tool to answer one of the most important questions during the underwriting process.
PointPredictive recently released its newest product — Income Validation Alert — a solution that can offer a real-time predictive assessment of an applicant’s stated income. If that income appears to be overstated by 15 percent or more, finance companies are notified so they can perform additional verification.
For applicant incomes below the 15-percent threshold, the finance company can streamline the underwriting process to ensure good contracts are not impacted.
With sub-second response times and high accuracy rates seen in the laboratory, PointPredictive expects the solution to have wide-reaching market usability, including:
—Pre-screening online mortgage and automotive applications
—Streamlining automotive application underwriting stipulations at dealers
—Enabling faster credit decisions for consumers
—Reducing the finance company cost of utilizing income-verification solutions that might be more time consuming, less accurate and more expensive
“Validating an applicant’s stated income in real-time has been an issue for lenders for many years. Traditional tools haven’t really addressed this issue well,” said Tim Grace, chief executive officer of PointPredictive.
“Employer-based database verification checks can typically verify income on only 30 percent of the applicant submissions, leaving 70 percent of stated incomes to be checked by manual processes,” Grace continued. “Verifying income directly with the borrower by requesting paystubs is often unreliable — some lenders report more than 20 percent of paystubs received are forged or altered.
“Lenders are looking for something accurate, fast and cost effective. Income Validation Alert should help immensely in this effort,” Grace went on to say.
Income Validation Alert can analyze a borrower’s stated income against millions of reported incomes and salaries from seven diverse sources. Then, using the applicant’s employer, occupation, job title, residence and estimated years of experience, a sophisticated machine-learning model can predict the borrower’s likely income.
When the borrower’s stated income exceeds what the model predicts by 15 percent or more, the finance company is alerted to the discrepancy and can further scrutinize the borrower’s income.
PointPredictive highlighted that what makes Income Validation Alert different than other approaches is the breadth and depth of salaries and reported incomes available to the validation process. Comparing a borrower’s stated income against seven different sources simultaneously and then using machine learning to cascade through those sources to determine the most reliable income for that borrower is a groundbreaking achievement.
The company added that early results illustrate just how powerful this approach is.
“In laboratory testing with live auto lending data, we were able to successfully clear the stated income data on more than 85 percent of applications while successfully identifying more than 80 percent of the applications with known, overstated incomes,” said Greg Gancarz, data scientist with PointPredictive.
“This level of detection is clearly a breakthrough in helping lenders identify one of their biggest pain points — knowing which applications require detailed income verification,” Gancarz went on to say.
Income Validation Alert is available to banks, finance companies and card issuers to verify stated income on applications. The service is available today for real-time integration into loan origination and underwriting workflows.
For more information on Income Validation Alert from PointPredictive, send a message to [email protected].
Megasys and Dealertrack now are collaborating even more; a development that might be especially beneficial to subprime auto finance companies.
Megasys, a provider of complete loan servicing systems for the consumer finance industry, announced this week a new facet of its integral partnership with Dealertrack. The latest partnership integration quickens the indirect financing decisioning process with dealers utilizing Dealertrack’s Credit Application Network solution.
Megasys already relied on Dealertrack to manage the electronic lien and title (ELT) process for finance companies, where state mandates require both dealers and finance companies adopt a fully digital titling solution between them and their governing DMV office.
Megasys said it chose Dealertrack as their preferred ELT provider because of the ease of integration along with perfecting capabilities that speed the entire application-to-title process and lien/title management that helps mitigate fraud risk.
Now with the same ease of integration for the F&I portion of finance companies’ processes, Megasys indicated the Omega Loan Origination System has improved service for its subprime auto finance companies by automating the credit application delivery and decision process to provide real-time approvals, declines and counter-offers back to dealers.
“The vast majority of dealers in the subprime finance industry use Dealertrack’s Credit Application Network,” Megasys president Theo Austin said. “We are excited to expand our partnership with such a trusted industry leader. This Dealertrack integration supports our growing customer demand to provide seamless integration to streamline the credit application process.”
Cheryl Miller, vice president and general manager of F&I solutions at Dealertrack, added, “By integrating with Megasys’ Omega LOS, Dealertrack’s network of lenders can receive credit applications from their dealers in real time and return automated decisions — cutting down time consumers must spend in the F&I office.
“This drastically improves satisfaction with the entire buying process,” Miller went on to say.
For more information about Dealertrack, visit www.Dealertrack.com.
Now with one quarter of 2018 in the books, Black Book and Fitch Ratings released their latest joint vehicle depreciation report.
Along with three other major findings, Black Book forecasted an annual depreciation rate of 17 percent in 2018 as the supply of used cars and trucks increases, up from a lower-than-expected 13.2 percent experienced in 2017 due to strong sales activity stemming from hurricanes last fall.
Three other trends included in the report were:
• New light vehicles sales volume decreased by 2 percent in 2017 to 17.14 million, below the record of 17.46 million in 2016.
• Light trucks, including SUVs, crossovers and pickups, continue to increase in U.S. new sales, constituting 65 percent of the volume compared to 57 percent in 2016 and 55 percent in 2015.
• Incentive spending by auto manufacturers grew year-over-year in 2017, ending the year at nearly $4,000 in average incentive amount on new vehicles.
2017 depreciation trends
In 2017, Black Book determined the prestige luxury car segment had the highest annual depreciation at 23.4 percent. On the other hand, editors noticed full-size pickups retained their value well throughout the year as demand of used pickups remained high, ending the year with only 5.1 percent in depreciation.
Black Book found that full-size crossover/SUV, the largest of the SUVs, had the strongest retention with a depreciation rate of 9.4 percent. Their values held up well with nearly zero depreciation in the first two quarters of the year.
Editors pointed out that sub-compact cars, the smallest of sedans, experienced the highest depreciation rate among non-luxury car segments at 17.6 percent in 2017. On the other hand, the next level up in sedans, compact cars, performed much better than in previous years.
Among the crossover/ SUVs, the smallest of the luxury crossovers, sub-compact luxury CUVs depreciated the most at 19.2 percent, according to Black Book’s analysis.
A look ahead at 2018 trends
In January of this year, editors calculated that a 2015 model year vehicle on average was valued at 51 percent in the wholesale arena as a percentage of typically-equipped MSRP. This three-year retention has dropped from 52 percent in January 2017, which at that time was for a 2014 model year vehicle.
Black Book residual value forecasts show that values of 2018 model year vehicles in January 2021 are expected to be three percentage points lower than the current retention trends averaged across all vehicle models.
At the specific vehicle segment, brand and individual vehicle level, residual values offer a different look, according to Black Book.
When economic conditions and expectations are factored into Black Book’s scenario-based residuals modeling, the trend shows a steeper drop in residual values when considering an economic downturn scenario.
The company also expects to see a slight pullback in lease penetration, as rising interest rates, declining residuals, tighter credit criteria and rising availability of off-lease used vehicle options make leasing more expensive for auto manufacturers and their captive finance companies.
“We expect vehicle depreciation to increase and residual values to decline in 2018 as used vehicle supplies increase while overall demand stabilizes,” said Anil Goyal, executive vice president of operations at Black Book.
“Consumer demand at the vehicle segment level may see more volatility, and as such lenders should analyze and measure portfolio equity on a regular basis to assess risk within their portfolios,” Goyal continued.
US Auto ABS outlook for 2018
Fitch’s prime asset performance is projected to continue normalizing but remain well within recessionary levels.
Analysts indicated prime annualized net losses (ANL) will get closer to the 1-percent range in 2018. Loss severity is a focus in 2018 as high used vehicle supply and reduced used-vehicle demand will constrain recoveries.
Fitch explained that extended-term contracts (lasting longer than 60 months), which comprise a large majority of all prime and subprime ABS pools securitized, remain a key risk next year, particularly if early defaults increase on these riskier loans and drive the pace of losses higher.
Fitch added subprime asset performance will be pressured in 2018 at or near prior recessionary levels, with the weakest performance attributed to the smaller and less seasoned finance companies, whom ABS platforms Fitch does not rate.
Analysts went on to mention the risk to subprime finance companies may accelerate as auto sales decline and competition ramps up, forcing them to further loosen credit standards to gain or hold market share.
Overall, Fitch expects severity to remain as the main factor impacting ABS performance, especially as more used supply puts pressure on recovery rates in auto ABS pools during 2018.
“Despite a relatively stable outlook for auto lease ABS asset performance in 2018, it is evident that increasing lease returns in 2018 will place more pressure on residual performance throughout the year,” said Hylton Heard, senior director at Fitch Ratings.
The Black Book-Fitch vehicle depreciation report is available here.
