Consumers are relying more on retail installment contracts and leases to acquire cars than they were eight years ago, yet many might not be as prepared as they should be going into the purchase.
However, the silver lining is that the vast majority appear to take those payments seriously once they’re in the deal.
This, according to separate studies from Instamotor and Experian Automotive.
In a presentation shared at the NADA Convention & Expo last month, Experian said 85.2 percent of new-car buyers relied on financing or leasing to fund their purchase in October and November.
Just 14.8 percent used cash.
In the fourth quarter of 2008, 77.7 percent used an installment contract/leasing to buy a new car, with 22.3 percent using cash. Those numbers have gradually shifted toward retail deals and leases over the past eight years, according to the Experian data.
The trend on the used-car side is similar, though leasing’s presence is considerably smaller, to say the least.
In Q4 of 2008, 56.9 percent paid cash for used cars, with 42.5 percent taking out a retail contract and 0.6 percent leasing.
In October and November of last year, 49.4 percent used cash for pre-owned vehicle purchases, with 49.8 percent using credit and 0.7 percent leasing.
Preparedness of borrowers
With so much reliance on loans and leasing, one might think that consumers would enter a car armed with things like credit-score information. But data in a study from Instamotor — titled 2017 Car Shopping Trend Report: How Prepared are Consumers? — suggests otherwise.
Instamotor, which surveyed 1,500 U.S. adults in January, found that 50.9 percent of consumers didn’t know their credit scores before buying a car.
What’s more, 71.3 percent of buyers ages 18-24 did not know their credit scores before buying a used vehicle.
In all other age brackets (25-34, 35-44, 45-54, 55-64, 65 and older), the percentage of folks who did not know their credit score ranged from 40.9 percent to 46.8 percent.
Instamotor also shared data on down payments, finding that 56.5 percent of car-buyers paid 10 percent or less of their respective incomes on the down payment of their last vehicle purchase.
Meanwhile, 27.2 percent paid 11-30 percent of their income; 11.6 percent paid 31-60 percent of their income; and 4.7 percent paid 61-99 percent of their income.
“Despite the well-known 20/4/10 rule, most Americans can only afford 10 percent or less for a down payment on a car,” Instamotor’s Julia Mak wrote in a blog post about the study.
“Previous reports state that new-car prices are unaffordable, resulting in consumers only able to afford a low down payment. So while a lower down payment may seem fiscally responsible in the short term, in the long-term car owners are at risk of paying more over time as a result of interest rate and longer-loan terms,” she said.
The Experian data sheds additional light on affordability. Average new-car payments in October/November were $504, with average monthly payment on used cars at franchised dealers coming in at $378.
In Q4 of 2008, the average payment on a new car was $465, with used franchised at $353.
Missing payments?
But here’s a good sign.
Only 12.4 percent of those surveyed by Instamotor have ever missed a car payment, with 87.6 percent saying they never have missed a payment.
Likewise, 90.8 percent of respondents have never refinanced a car loan, with just 9.2 percent saying they had.
But Mak points out in the post that “refinancing doesn’t always mean bad things ahead. If your credit score or interest rates have improved, it makes sense to refinance to reduce the duration of your loan.”
Experian does point out that the percent of contracts 60 days past due has climbed over the past few years. So, finance companies — in general — have aimed to increase the credit quality in their paper.
Terms are also becoming longer. According to Experian, 72.8 percent of new-car contracts were longer than 60 months in October/November, with 62.2 percent of used-car contracts in that ballpark.
In Q4 of 2008, those numbers were at 50.5 percent for new and 42.7 percent for used.
But credit quality is higher for longer terms. Experian said the average score on 73-84-month contract was 682 for new in October/November and 671 for used.
On the new-car side, that’s down from Q4 2008 (694) but up from 681 in Q4 2015. For used cars, that compares to 670 in Q4 2008 and 669 in Q4 2015.
Credit Acceptance Corp. posted year-over-year income increases even as company leadership acknowledged the difficulty in keeping originations coming through its dealer network as well as intensifying regulatory demands.
This past Friday, a few days after sharing its fourth-quarter and full-year financial results, Credit Acceptance said it received a civil investigative demand from the Federal Trade Commission on Nov. 7. Credit Acceptance said in a filing with the Securities and Exchange Commission that the FTC is seeking information on the company’s polices, practices and procedures in allowing dealers to use GPS starter interrupters on vehicles.
“We are cooperating with the inquiry and cannot predict the eventual scope, duration or outcome at this time,” the company said in the filing. “As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.”
When the company released its fourth-quarter and full-year results, an investment analyst spotted an increase in its general and administrative expense of $2.7 million, or 27.6 percent. Credit Acceptance said it was primarily as a result of an increase in legal fees.
The analyst pressed and asked, “What was the increased legal fees that you guys noted in the press release?”
According to a transcript of the quarterly conference call posted by Credit Acceptance, senior vice president and treasurer Doug Busk replied, “Nothing specific there. We just have a bunch of issues ongoing that are consuming increased amounts of legal resources.”
Nevertheless, Credit Acceptance reported that its Q4 consolidated net income came in at $87.6 million, or $4.33 per diluted share, up from $80.0 million, or $3.84 per diluted share, during the same period a year earlier.
In all of 2016, the company generated $332.8 million, or $16.31 per diluted share, in consolidated net income, marking a rise from the 2015 figures that were $299.7 million, or $14.28 per diluted share.
Credit Acceptance also mentioned its adjusted net income, a non-GAAP financial measure, for Q4 climbed to $96.7 million, or $4.79 per diluted share. A year earlier, it was $83.3 million, or $4.00 per diluted share.
For the year, the company’s adjusted net income totaled $360.6 million, or $17.67 per diluted share; a rise from $309.8 million, or $14.77 per diluted share, compiled during 2015.
Originations and dealer relationships
Credit Acceptance finished 2016 with originations softening a bit during the fourth quarter. But for the full year, the company’s origination figure jumped by 10.9 percent.
The company secured 74,340 contracts in Q4; a figure 5.6 percent lower than the 70,179 originations posted during the year-earlier quarter. For all of 2016, Credit Acceptance took in 330,710 contracts, up from 298,288 booked in 2015.
The quarterly drop-off in originations prompted the opening question during Credit Acceptance’s conference call. Perhaps a reason why is the company posted double-digit gains year-over-year in quarterly originations for seven consecutive periods, including a high of 41.3 percent in Q3 of 2015.
“I think the first factor I would look at is the competitive environment,” Credit Acceptance chief executive officer Brett Roberts said. “That certainly makes things challenging. We're not getting any improvement there, but I don’t think it got any worse either.
“So I think what you saw in the fourth quarter is — as we talked about in prior calls — our strategy when the environment is competitive is to focus on growing the number of active dealers,” Roberts continued. “It is difficult to grow volume per dealer when it is very competitive. But as I think we alluded to several quarters ago, as the base of dealers gets bigger, it becomes more difficult to grow that at a fast enough rate in order to offset the decline in volume per dealer, and to a lesser extent, attrition. So that is what we're seeing right now.”
Roberts also mentioned another factor that might have impacted how much paper Credit Acceptance brought into its portfolio during Q4.
“I think in the fourth quarter, the other thing that came into play is, we addressed some of the negative variances that we have seen in recent originations. When we do that, it causes our initial collection forecast to decline, which means we advance the dealers less money. So that has a one-time impact on volume per dealer, and also on attrition,” Roberts said.
Credit Acceptance closed Q4 with 7,260 active dealers. The company considers a dealer to be active when a dealership has received funding for at least one contract during the period. The investment community wondered if Credit Acceptance might hit a ceiling for its active dealer network at perhaps 7,500.
“I think it’s too early to call it a ceiling. It's definitely a point of resistance. If the competitive environment, obviously, if that changes, that will change everything. But if we assume that the current state continues for the foreseeable future, I would look at it, at this point, as a point of resistance, and not a ceiling,” Roberts said.
More details of incoming contracts
The average contract amount and term Credit Acceptance added into its portfolio in Q4 hit new highs. The company reported the average amount financed was $18,218 and average term was 53 months.
For perspective, Credit Acceptance pointed out that back in 2007, those metrics were $13,878 and 41 months.
“We write terms all across the spectrum, from six months to 72 months, so the average term is a function of the mix. We do not have any current plans to increase the maximum term beyond 72. So the average will just be a function of our pricing strategies and where we see the most opportunity,” Roberts said.
“As we’ve talked about in prior calls, over a period of time when I first started, we would only write a 24-month loan. And we accumulated data and extended it out to 30, and accumulated more data, and we walked our way out to 72 months over a period of about 25 years. So we have been careful about it. And we’re comfortable with the terms that we offer now,” he continued.
Three parts of internal changes
As Roberts referenced, Credit Acceptance indicated that the company enhanced its methodology for forecasting the amount and timing of future collections on contracts through the utilization of more recent data and new forecast variables. The company spelled out three components involved in the implementation of the enhanced forecasting methodology that went into effect as of Oct 31, including:
• Decreased the forecasted collection rates for contract assigned in 2015 and 2016 and increased the forecasted collection rates for contracts assigned in 2011 through 2013
• Reduced forecasted net cash flows by $1.8 million, all of which related to indirect dealer contracts
• Did not have a material impact on provision for credit losses or net income
“We periodically refresh the model. So it is based on all the information we collect, both at loan origination, and as the loan moves through the servicing process,” Roberts said. “So it is really just mostly an update of the data, a refresh there. And also we redo the actual scorecard and re-weight the variables based on what seems to be most predictive.
“So it is something we do periodically, it’s more of a routine update. And really, the numbers were not all that different from what we had before,” he added.
Don Foss mentioned
Credit Acceptance announced back on Jan. 4 that founder Donald Foss, who most recently served as the company’s chairman, decided to retire as an officer and director. At that time, the company indicated the board had no intention to fill the chairman’s role or to fill the vacancy on the board created by Foss’ retirement. Credit Acceptance added the board of directors will be led by lead director and chair of the audit committee, Thomas Tryforos.
When the topic was broached during the Credit Acceptance conference call, Roberts reiterated the same company intentions.
“No, there are no plans at this point to have a chairman. We have a lead director. But we don’t need a chairman, and we have no plans to replace him,” Roberts said.
During last week’s industry festivities in the Big Easy, Equifax rolled out solution enhancements with a trio of other service providers — Fiserv, Digital Matrix Systems and Dominion Dealer Solutions.
First, Equifax and financial services technology solutions Fiserv collaborated on an interface between The Work Number provided by Equifax Workforce Solutions and Fiserv's Automotive Loan Origination System. Together, the companies said the solutions can provide faster and more robust income and employment verifications to customers.
Refreshed each pay period, Equifax claims The Work Number is the largest database of income and employment information provided directly from employers and includes records from more than 75 percent of the Fortune 500 companies, including an increasing number of medium-to small-sized employers.
“Fiserv has chosen our income and employment verification solution because it provides instant access to data that can help its customers close deals faster,” said Scott Collins, senior vice president Verification Services at Equifax Workforce Solutions.
“These clients are already using our traditional credit and commercial data and this enhancement will provide a deeper view of a consumer's credit profile and provide a tremendous value to their overall underwriting process,” Collins continued.
Fiserv is one of the industry’s top providers of auto loan origination and servicing systems, completing upwards of 5 million originations on 18 million credit applications on its Automotive Loan Origination System last year alone. The connection to the Equifax database can allow finance companies to secure income and employment data in seconds and help approve applications quicker and limit stipulations.
Charles Sutherland, vice president of product management and strategy within lending solutions at Fiserv, said of the integration, “After surveying the market for a proven partner, it became evident that The Work Number met all of our success criteria.
“Together, these two applications aim to improve the speed and accuracy of consumer originations,” Sutherland continued.
Integration into Digital Matrix Systems
In other company news associated The Work Number, Equifax announced that Digital Matrix Systems (DMS), a leading risk management solution provider, has established connectivity to the credit bureau’s tool to provide income and employment verifications to DMS clients.
Both operations insisted that verifying income and employment can allow finance companies to minimize exposure to fraud. They continued that leveraging data from third-party sources for proof of income can streamline the overall process, resulting in improved efficiency.
Access to The Work Number data will be available through Data Access Point by DMS, a connectivity hub that can offers clients flexibility when using both traditional and alternative data sources.
“We continually survey the market and work with our partners to evaluate new data sources for our clients, and the addition of The Work Number will allow us to provide access to a unique and beneficial data set,” said David Graves, DMS executive vice president.
“DMS and Equifax share a mutual goal — to improve the speed and accuracy of consumer originations,” Graves continued.
Equifax’s Collins added, “Our income and employment verification solution rounds out the DMS offering by enabling instant access to data that can help their clients reach business decisions faster.
“Being in a position to have a more comprehensive view of a consumer's credit profile will help give these lenders greater confidence around credit risk and their customers’ ability to repay,” he went on to say.
Equifax highlights service lane equity mining capability
Furthermore, Equifax also launched availability of PowerLead Offer — a new soft-pull credit-based solution designed for the dealership service lane — that can prescreen customers for potential vehicle financing offers.
John Giamalvo, vice president of dealer services at Equifax, explained that instances where a customer brings a vehicle to the dealership for maintenance or repairs present a unique opportunity to prescreen for additional sales opportunities. Giamalvo noted that PowerLead Offer can enable a service provider to prescreen the customer, either prior to their arrival or on-the-spot, to assess eligibility and terms for a new car firm offer of credit.
When the consumer qualifies, a firm offer of credit can be provided to the customer during the vehicle servicing experience.
“A face-to-face encounter with a customer is a sales conversion opportunity and the introduction of a qualified offer enables the dealership to better maximize every customer touchpoint, even outside the showroom,” Giamalvo said
Dominion Dealer Solutions, a provider of web-based customer relationship management and dealer management system technology, was the first within the industry to adopt PowerLead Offer. The company will leverage the solution as an enhancement to its equity mining platform DealActivator to help increase the unique value it provides to its dealer customers.
“This integration will keep our dealers compliant and their customer’s information secure, while helping to significantly increase the dealers’ equity opportunities in the service lane,” said Alan Andreu, general manager of equity solutions for Dominion Dealer Solutions.
“I am excited that DealActivator can directly offer dealers soft credit pulls with the largest credit provider in the country,” Andreu went on to say.
RouteOne unveiled a pair of solutions aimed at helping dealerships and finance companies complete vehicle deliveries and documents in the showroom or wherever the purchaser might be.
On Monday, RouteOne launched remote document delivery; what the company explained is a new technology that can securely and compliantly give consumers electronic access to their eContracted documents. At the same time, the tool can reduce printing costs and paper shuffling for dealers.
Paradoxically, RouteOne acknowledged the eContracting process still involves paper, and can result in printed review and signed copies of retail and lease contracts. The company noted paper has remained part of the process, in part, because of compliance requirements surrounding providing consumers with copies of their contracts that they can take with them. Previously, the only way to accomplish this requirement was the paper option.
With RouteOne’s remote document delivery technology, the company explained the need to print review and final copies of retail and lease contracts is alleviated.
Now with a click of a button and the consumer’s email address, dealers can send their customers a secure link to access their files.
As an option, customers can review the documents in the dealership on their own smartphone or tablet. They can also log in at home to review, save or print them for later reference.
“We listened, we heard and we responded,” RouteOne chief executive officer Justin Oesterle said. “Our dealers told us they love eContracting, but they wanted less paper. Remote document delivery came from listening to our customers.
“We often refer to RouteOne as the company that is ‘designed by dealers for dealers’, and this is a great example of how we strive to make that happen,” Oesterle continued.
The new technology, led by Toyota Financial Services and Ford Motor Credit, is now available functionality for RouteOne eContracting. As part of RouteOne’s commitment to making eContracting better and better, it is provided at no charge.
In the future, the company added the documents available in remote document delivery will continue to expand as RouteOne continues to advance eContracting.
Details of RouteOne’s new digital retail platform
Meanwhile, RouteOne highlighted its new digital retail services can provide dealerships with an online credit application containing dealer-selected branding along with a mobile point of sale application to accommodate consumers’ growing demands for a seamless transition to, and greater flexibility within, the in-store vehicle purchasing process.
RouteOne wanted to give dealers this easy-to-use technology, allowing their customers to complete a credit application themselves or as guided by the dealer. This process can occur online from the dealer’s website, in the dealer’s showroom, or wherever a deal may happen — from any mobile device.
The mobile point of sale app included in RouteOne’s digital retail services, not only can provide flexibility, but also enables consumers to eSign the credit application. Compliance features, including credit score disclosure notice, privacy policy and identity verification, can be automated for every online application to assist dealers in managing their regulatory requirements.
RouteOne chief strategy officer Todd Mason pointed out that dealers who have made the shift have found that RouteOne’s digital retail services can reduce errors and missing information, which can expedite the deal funding process. The information captured in the online credit application can flow directly into a RouteOne eContract, creating a seamless, digital F&I experience.
“Providing dealers with the ability to conduct business online is not new territory for RouteOne,” Mason said. “However, as the consumer’s journey changes and business models evolve, so will our technology.
“This new digital retail platform responds to the growing need for greater flexibility within the vehicle purchasing process,” he went on to say.
To learn more about RouteOne’s new tool, visit routeone.com/dealers/digital-retail-services.
This week, alternative credit data provider FactorTrust finalized a partnership with White Clarke Group, which has automotive and asset finance software for retail, floorplan and fleet.
The companies highlighted auto finance service providers who utilize White Clarke Group’s CALMS loan management solution will have access to FactorTrust’s alternative data in an effort to give underbanked consumers faster approvals and offering financial service providers lower underwriting costs and more accurate pricing ability.
“As a company dedicated to innovation, this seamless integration with FactorTrust’s underbanked consumer loan performance, stability and employment data allows our customers access to the most comprehensive alternative credit information on the market. This, combined with traditional data sources, offers financial service providers a competitive advantage when it comes to pricing and underwriting non-prime consumers,” said Jonathan Dodds, White Clarke Group chief executive officer for the Americas.
FactorTrust CEO Greg Rable added, “We are proud to partner with White Clarke Group to help our mutual clients succeed.
“It’s important to recognize the need for using alternative data during the underwriting and portfolio management processes — data not available to them elsewhere and not reported to the Big Three credit bureaus — to help businesses grow and provide more non-prime consumers the options they deserve,” Rable went on to say.
TransUnion described how quickly technology is being leveraged dishonestly, putting finance companies into a challenging place of chasing for someone who probably never even existed.
Pat Phelan indicated individuals who are looking to commit sophisticated credit fraud are quickly moving their targets from goods that might cost less than $200 to some of the most expensive vehicles in a dealer’s inventory — and leaving finance companies on the hook for the amount attached to the contract and no collateral.
The senior vice president in TransUnion’s innovative solutions group explained to SubPrime Auto Finance News the concept of synthetic identities.
“What they’ve now discovered is they can take elements of genuine identities, usually around a credit breach or an identity breach, and they can build fake identities and take that to a dealer and drive out with a very high-end automobile. The only people who really suffer is the lender because the car is gone,” Phelan said.
“It wasn’t someone else’s identity. It was a synthetic identity, created for that purpose of committing fraud,” he continued.
Phelan noted that what’s happening now is similar to what’s also known as loan stacking. An individual first might commit fraud through a cellular phone contract, move into credit cards and small bank loans and then on to what he says is the “big-ticket item,” a car.
“It’s really starting to accelerate at the moment,” Phelan said about synthetic fraud happening in the auto finance space. He estimated the activity has jumped by 15 percent during the past 24 months.
Phelan added these crimes happen over a period of time.
“These aren’t done on a Monday to cash out of a Friday,” he said. “There is intense behavioral stuff here.”
In response, TransUnion on Wednesday unveiled IDVisionSM, a suite of solutions providing finance companies with bureau officials think is a holistic approach to fraud and identity management. IDVision is designed to help companies stop sophisticated and evolving fraud while also protecting and restoring their confidence in conducting business.
TransUnion’s IDVision suite is comprised of multiple solutions, addressing a variety of critical issues in the fraud and identity management space. For instance, the Synthetic Fraud Model addresses the key question of whether an identity has been fabricated or manipulated. Digital Verification and Authentication solutions ensure consumers are who they say they are by examining hundreds of digital signals captured during an online or mobile transaction.
IDVision also includes the recently launched Fraud Prevention Exchange, a first to market solution designed to help both established finance companies such as credit card issuers and emerging FinTech lenders combat online first party fraud by monitoring application velocity and reported fraud real-time.
“Fraud today does not just impact businesses’ bottom lines with current customers, it also causes losses related to lost opportunities when frustrated customers walk away, and also from back office expenses incurred to manually review fraud,” Phelan said in a news release.
“The fact that businesses can receive all of the fraud and identity management tools necessary to prevent losses in one suite of solutions sets IDVision apart from others in this growing industry,” he added.
An example of the power of IDVision recently occurred when TransUnion said correctly identified 95 percent of fraud cases for an auto finance company. At an estimated average of $22,000 per loan with no recovery, averted losses would save almost $2 million for every 100 cases. Losses such as this are due to synthetic fraud and fraudulent loan stacking — recent fraud and identity threats addressed by the IDVision suite.
“We’ve seen this behavior is causing major problems, especially in subprime and near-prime where we see some purchaser got a loan and then within 15 days are more than two and a half times more likely to default on payment,” Phelan told SubPrime Auto Finance News earlier this week.
“A couple of months ago, a Russian crime ring was targeting the U.S. lending and had actually hired perfect English speakers,” he continued. “So if there any chance of the loan being flagged, the English speaker would get on the phone and they would be paid bonuses based on the loans given.
“A really big industry has sprung up around this, and it all starts with this compromise of the identity. Once you have that identity started, it’s quite difficult to detect it,” Phelan went on to say.
That’s why TransUnion is so high on its latest tool. Credit bureau officials insisted IDVision brings together robust data assets with advanced analytics technology that links, interprets and analyzes information to discover anomalies and patterns of risk. Finance companies receive actionable alerts and instantly delivered scores so they can make timely decisions.
As a result, TransUnion emphasized finance companies across various industries can identify more good consumers to enable secure, confident and convenient authentication. Additionally, they can detect more fraud patterns at origination, during transactions and by monitoring portfolios — allowing them to improve the customer experience.
“As fraud evolves and becomes more sophisticated, the legacy systems many businesses have in place are not sufficient to detect today’s fraudsters,” Chris Cartwright, president of TransUnion’s U.S. Information Services, said in a news release.
“We developed IDVision to provide greater certainty now, and as fraud evolves — while still meeting the expectations of speed and uninterrupted consumer experience our customers need,” Cartwright continued. “The IDVision suite works to learn and predict patterns of risk to help customers more strategically anticipate tomorrow’s threats by staying ahead of fraudsters today.”
TransUnion recently purchased Phelan’s company; a European firm that specialized in synthetic identity investigation. The acquisition turned out to be a crucial part of what TransUnion is now offering.
“We’ve put it all together for the first time,” he said. “I’ve seen lots of pieces of this. There are lots of companies that do online fraud. I’ve seen some companies that do synthetic fraud and others that do loan stacking. But I’ve seen no company that has all of this in one simple API.”
Within weeks of reaching a partnership with a subprime auto finance company, AutoGravity — a FinTech developer on a mission to transform auto financing by harnessing the power of the smartphone — announced on Wednesday that potential buyers in 46 states can obtain up to four financing offers on any make, model or trim of new or used vehicle.
Shoppers can receive their offers through four steps on the AutoGravity platform, which can return personalized retail installment contract and lease offers within minutes.
“AutoGravity has brought car finance into the digital age,” said Andy Hinrichs, who became AutoGravity’s founder and chief executive officer after decades as an auto finance executive.
“Our industry-leading technology has been embraced by top banks and captive auto lenders, as well as leading dealer groups who see customers shopping on their smartphones every day,” Hinrichs continued in a news release. “We’ve re-designed the car finance experience, taking it from hours to minutes for car buyers across the country.”
Earlier this month, the firm finalized a partnership with First Investors Financial Services, bringing the subprime auto finance company’s indirect financing business onto the AutoGravity platform.
Based in Irvine, Calif., AutoGravity said it has built other partnerships with the world’s leading banks, captive finance companies and leading dealership groups. As a result, AutoGravity claims to be the only company to successfully bring thousands of dealers and an extensive list of top global finance companies together in a single, convenient digital marketplace.
“To truly empower car buyers with access to every possible vehicle, dealer and finance choice, the AutoGravity platform must be an attractive place for lenders and dealers to do business,” said Serge Vartanov, AutoGravity’s chief marketing officer.
“We’ve spent over a year integrating lenders and dealers into the platform, and we’re now ready for customers across the country to start shopping and financing —making AutoGravity a game-changer in the auto-finance industry,” Vartanov continued.
The app can guide vehicle shoppers through an intuitive four step process:
1. Select any make, model and trim of new or used vehicle available in the United States.
2. Select any dealership from AutoGravity’s proprietary national database; the platform automatically pinpoints the location and shows the closest dealers selling the vehicle.
3. Search for financing for the selected vehicle on a smartphone. Users can scan their driver’s license and connect to social media to quickly pre-fill the finance application.
4. Receive up to four finance offers within minutes. They can select the retail installment contract or lease offer that’s right and head to the dealership to complete the delivery.
“AutoGravity’s highly-streamlined process is designed to address the shopping habits and demands of modern consumers, particularly millennials,” the company said. “This is made possible through AutoGravity’s unparalleled technical expertise, partnerships with the world’s most prominent lenders and a proprietary database of trusted dealerships.
Designed with state-of-the-art security, AutoGravity protects consumers’ information with advanced bank-level encryption and proprietary data security technologies, ensuring sensitive information is processed in a safe and secure way,” the company went on to say.
The app is available for download on from the Apple App Store and from Google Play. AutoGravity is also available as a mobile-responsive web-app at www.autogravity.com.
White Clarke Group is continuing to organize discussions about how the growing development of blockchain might “revolutionize” the auto finance industry.
During White Clarke Group’s Auto Captives Summit back in November, Danny Williams, chief innovation officer at IBM UK explained how blockchain technology can be used to efficiently track a vehicle from the moment it is assigned a VIN through to the very end of its life.
Williams also referenced the benefits blockchain could bring to the auto finance industry by increasing trust, reducing risk, eliminating intermediary costs and saving time.
Williams’ presentation can be seen here as well as the window at the top of this page.
Williams isn’t the only expert highlighting blockchain’s possibilities
Late last year, Toyota Financial Services (TFS) made the corporate decision to join R3’s CEV blockchain consortium to explore distributed and shared ledger technology for potential applications in auto financing.
TFS thus became the first global auto finance captive to collaborate with more than 50 of the largest financial institutions in R3’s network on developing use cases for blockchain in the financial industry.
Chris Ballinger, who is chief financial officer and chief officer of strategic innovation at Toyota Financial Services was at the forefront of the deal, saying that blockchain “will ultimately lower costs, increase efficiency, and make auto finance more transparent.
“We can all agree, that’s the future, some are just disagreeing on the timing of it,” Ballinger continued. “However, financing products for those markets have not been developed yet. You just see little experiments, and I think that’s big change and the big opportunity for auto finance. It’s a big market, huge, and question is how do we finance it, and make it affordable."
The event White Clark Group hosted extended a string of blockchain discussions the company was involved in a year ago.
Outside the discussion groups, White Clark Group said developers are experimenting with blockchain applications, but as yet there have not been any large scale projects built around blockchain technology that are not bitcoin or “altcoin” related.
“The appetite for extending its use however, seems to be massive,” the company said.
The American Financial Services Association’s Vehicle Finance Conference last year in Las Vegas dedicated an entire keynote presentation to blockchain technology. Haskell Garfinkel, fintech co-lead at PricewaterhouseCoopers, made the presentation, which can be watched here thanks to sponsorship by White Clarke Group.
Leadership at defi SOLUTIONS made several advances with its loan origination system (LOS) a year ago, including integrated reporting and analytics capabilities, aligning with both a vehicle service contract provider as well as a document delivery operation. The management of defi SOLUTIONS also ramped up a partnership with another technology provider.
And as the industry is about to gather again for the Vehicle Finance Conference hosted by the American Financial Services Association, defi SOLUTIONS now is reaping the benefits of those moves, especially in relation to defi ANALYTICS.
That solution is geared to offer finance companies an intuitive reporting system that designed to be both efficient and easy to use, whether exploring data or customizing reports. The system gives finance companies complete control over report access so that decision makers in different departments can see the reports most relevant to them.
“We're excited about defi ANALYTICS simplifying and improving our originations reporting,” said Mark Humphrey, chief credit officer of Tidalwave Finance, a non-prime provider that’s been in business for more than a decade out of Santa Ana, Calif.
“A significant amount of our time is being saved with the user-friendly dashboard that provides the information we want when we want it and in an easy to read format,” Humphrey continued. “Since implementing defi almost two years ago, we have been continually pleased with how defi works with clients to enhance the lending platform and expand services to make lending better.
Humphrey added, “defi ANALYTICS is allowing us to take a giant leap forward with easy data access and configurable reporting.”
In addition to easy-to-use reporting, defi ANALYTICS partners with Equifax to offer a subscription-based quarterly Lost Sales Analysis that can give finance companies ongoing opportunities to enhance capture rates based on current lost sales data and analysis. The Lost Sales Analysis can generate insight on which competitors win applications, how deal structures compare, what external factors may affect the underwriting process and how lost applications are performing.
“The timely and flexible reporting and lost sales analysis tools combine to form a firm foundation for users of the defi ANALYTICS system,” the company said. “This foundation will grow throughout 2017 and beyond into a full service analytics system with industry benchmarking and additional analytics tools and services.”
For a live demonstration of defi ANALYTICS, finance company executives can visit with defi SOLUTIONS at its booth during AFSA’s Vehicle Finance Conference, which begins on Tuesday in New Orleans.
Announcements recently arrived involving PassTime GPS, Heritage Acceptance and Sword Apak.
LEVERAGE, the service corporation of the League of Southeastern Credit Unions & Affiliates (LSCU) that equips credit union partners with products and services to fulfill day-to-day needs, named PassTime GPS as its preferred GPS provider.
Officials explained this technology can provide credit unions with a greater ability to grow more members with added protection, improve member payment performance and reduce delinquency rates.
It also provides the tools to increase originations without increasing staff. PassTime GPS technology can help to ensure accounts stay current and can help create opportunities to cross-sell to a more loyal borrower.
“At LEVERAGE, part of our mission is to offer new strategies to credit unions for loan growth. PassTime GPS is designed to provide participating credit unions with a stronger competitive advantage in auto lending,” said LEVERAGE president and chief executive officer Patrick La Pine.
“The market for subprime lending is expanding, and PassTime GPS will deliver resources needed for credit unions to meet the growing needs of this market,” La Pine continued.
Improving the bottom line by reducing expenses, growing loans and increasing non-interest income, as well as improving regulatory compliance, LEVERAGE offers products to increase operational efficiencies for credit unions across all environments. Streamlining actions that valuable organizational resources can allow more time to concentrate on serving members.
“When credit unions support LEVERAGE, they are supporting the credit union system. LEVERAGE brings simple solutions that pay big dividends,” the service provider said.
Some of the PassTime product features include tamper detection, scheduled payment reminders, web based command management, tamper detection and text/email communication.
“We are very excited to partner with LEVERAGE as the group’s preferred GPS provider,” PassTime chief operating officer Chris Macheca said.
“LEVERAGE has built a reputation in the industry as partnering with best-in-class vendors to offer its members access to solutions to help their businesses,” Macheca continued. “We look forward to continuing to help credit unions increase their collections and reduce repossessions with our GPS and automated collection technology.”
For more information about LEVERAGE and its products and services, contact Rhea Oaks, director, product management, at (866) 231-0545, ext. 1146.
Heritage’s new VSC offering
Heritage Acceptance, a finance company specializing in purchasing automotive retail installment contracts, announced a new vehicle service contract offered through Marathon Administrative Co.
“We are excited to announce more expansive product offering for our dealers and customers,” Heritage president Curt Holmes said. “The new coverage offers coverage to the customer that includes roadside assistance and a higher liability limit that will better protect the customer’s investment.
“Should there be a covered failure Marathon claims managers will be quick to expedite claims and get the customer back on the road with minimal inconvenience,” Holmes continued.
Heritage vice president of sales and marketing Mike Monaghan added, “The new plan offered by Heritage will be a greater benefit to the selling dealer. With automatic customer referrals, improved labor rate payment and an enhanced compensation plan, this product is a great win for our dealers as well as the customer.”
BMW Group Financial Services launch Pan-European technology program with Sword Apak
The planned harmonization of BMW Group Financial Services European core operating systems under the iDEAL Program (Integrated Delivery of a European Application Landscape) is designed to integrate three key modules. That group includes commercial finance, dealer front-end and contract management system for retail leases and installment contracts. The first component has been the Pan-European delivery of Sword Apak’s wholesale finance floor planning system (WFS) for commercial finance.
By delivering on time and on budget, Sword Apak said it will help to continue to shape the following rollouts and phases of the program. Following a rigorous selection process, Sword Apak was selected to support the commercial finance core element of the iDEAL Program, due to its proven experience in providing state-of-the-art wholesale floorplan financing solutions on a single platform that work seamlessly across multiple geographies.
“iDEAL has the ambitious strategy to create standard operating solutions across BMW FS in Europe. In such a bold undertaking, it is always important to get off to a great start,” said Axel Frank, the IT project lead for BMW Group Financial Services for commercial finance.
“The fact that WFS has a proven track record across different geographies made it a natural candidate to select it and kick start with WFS the wider iDEAL program,” Frank continued. “The technical and project management expertise that Sword Apak has brought to the rollout has been invaluable.”
Since the successful launch of wholesale finance floor planning system for both the U.K. and the Republic of Ireland markets of BMW Group Financial Services, the system is now being utilized by 1,143 users and has been made available to more than 260 BMW Group and ALPHERA retailers and dealer partners.
The complexity of the project required the migration of 354 retailers, 1,416 credit lines and 63,415 existing loans. The entire process was facilitated by Sword Apak’s API integration layer, which allows connection to 13 surrounding systems.
“BMW Group Financial Services allowed us to play a very active part within its fantastic team; happy to learn from our expertise in other Pan-European and indeed global applications,” Sword Apak executive vice president James Powell said. “They welcomed our expertise on both the technical and cultural challenges that such a program faces and we gained new insights on the emerging challenges facing captives of OEMs in what is a truly dynamic global market.
“We are proud to have partnered with BMW FS to hit their first major milestone on schedule; now we are gearing up to accelerate delivery to even more roll outs,” Powell went on to say.
