With potential buyers walking into the dealerships with smartphones and the ability to find information, DealerPeak’s Desk Max is looking to equip store personnel with a tablet-driven tool to generate vital data stemming from soft credit pulls, potential monthly payment details and more.
DealerPeak recently enhanced its tool to users to log-in customers, add vehicles of interest and complete the trade-in process with three simple scans. Additionally, users can desk deals, pull credit, amend deal structure, pull credit, and start the deal process directly from the lot.
DealerPeak chief product officer Rick McLey designed and developed the platform. DealerPeak debuted in 1999 with a primary task to support a 17-location automotive franchise that was rapidly expanding. Over the past few years, DealerPeak has been focusing on developing mobile-first technology, to create practical solutions several of their consumers have been seeking.
The Desk Max mobile desking solution is powered by strategic partnerships with companies including 700Credit, which permits the user to access their soft-pull technology to begin the sales process. Additional partnerships with Dealertrack, Automate DMS Deal Push, Autosoft, CDK Global, Reynolds & Reynolds and others also are involved in DMS integration.
Each of these tools built into Desk Max can return all rebates and rates for purchases and lease deal structures. It can check rebates for compatibility to ensure little to no rebate chargebacks. The infusion of these tools can permit dealers to create the best deals for themselves and the customers out of the gate.
“Most car dealer CRM’s offer a watered-down desking solution – that’s not good enough for our valued clients,” McLey said.
“DealerPeak has leveraged our mobile-first technology to create a tablet and mobile desking solution that completely automates the deal,” he continued. “This type of flexibility gives dealerships the ability to roll payment options, change banks, amend terms and review all rebates from their tablet or mobile device. It also automatically checks compatibility to minimize the potential of rebate chargebacks
“Our ultimate goal was to develop mobile first CRM solutions for car dealerships that will enhance the customer buying experience,” McLey added. “With complete DMS integration, the ability to process new car lease and purchases, include city, county, and state tax structures, and print all documents directly from the lot, along with complete device integration, we’ve created a robust and complete car dealership CRM solution.
“We’re excited to offer this mobile-first desking technology in each of our DealerPeak Evolution solutions,” he went on to say.
The DealerPeak mobile-first technology powers each of its CRM solutions including CarDog.com, DealerPeakPlus.com and its new DealerPeak Classic platform. Each is custom designed for different sized dealerships. All DealerPeak solutions are supported by a team of technical experts that have extensive dealership experience.
“Their practical car dealership knowledge combined with technical expertise allows them to provide real-world solutions that are easy to follow and comprehend,” the company said.
To learn more about DealerPeak’s desktop and mobile desking tool, Desk Max, visit this website.
As finance companies know, critical data on tax liens and civil judgments is no longer included as part of the standard consumer credit report issued from all three major credit bureaus; a move that became effective last April.
LexisNexis Risk Solutions recently released study findings that show how much more risk finance companies are absorbing when underwriting paper nowadays because that data is no longer available on those often-used credit reports, creating what the firm called “silent subprime consumers.”
In its study, LexisNexis Risk Solutions determined consumers with liens or judgments represented 6% of the approved population but accounted for 15% of the defaulting consumers.
“The absence of liens and judgments information may lead to an artificially inflated credit bureau score and can obscure the true risk represented by a consumer with a lien and judgments hit,” the firm said in the report. “By removing it from credit reports, and consequently your credit decisions, you may be exposing your business to costlier risks than you realize.”
In its study, LexisNexis Risk Solutions discovered consumers with a lien or judgment scored 16 points higher on average on a commercially available credit score when compared to a score that accounted for liens and judgments information.
The study also found consumers with liens or judgments were substantially riskier than their credit score would indicate.
LexisNexis Risk Solutions noted that auto-finance applicants at a 620 credit bureau score cutoff, 74% of defaulters were captured when liens and judgments information was factored in, compared to only 57% captured using credit bureau data alone.
The firm went on to emphasize that higher scoring consumers are not immune from hidden liens and judgments risk.
“The best scoring consumers in the 700-plus range could represent your costliest and biggest risk when they have unreported liens or judgments,” LexisNexis Risk Solutions said.
The default rate for consumers scoring 700 or higher increased by 154% in its auto-finance sample for individuals with a hidden tax lien or judgment compared to those without one.
“Our study found out of 1,900 auto loans, the total balances of consumers with suppressed liens or judgments that default equaled nearly $61 million,” analysts said in the report.
“Including hidden liens and judgments data into underwriting processes will make risk-based decisions more accurate,” they continued. “The lack of liens and judgments information in traditional credit scores contributes to an influx of ‘silent subprime’ consumers that represent significant lending risks.
“On the surface, these consumers appear to be creditworthy, but when an unreported lien or judgment lurks, they tend go bad at disproportionately high rates, leaving your business exposed to more losses,” LexisNexis Risk Solutions went on to say. “A score which considers liens and judgments can identify and ‘swap-out’ high-risk consumers with a lien or judgment and replace or ‘swap-in’ low-risk consumers without a lien or judgment.
In our analysis, we found these consumers who were swapped out were 3.0 times to 4.2 times (riskier),” the firm added.
LexisNexis Risk Solutions insisted that it can help finance companies close the liens and judgments information gap. The firm offers a tool that can access lien and judgment records on more than 86 million consumers sourced from all 50 states and 89% of all counties, parishes and boroughs.
“By combining the industry’s largest collection of public records and alternative data sources with our powerful linking technology, we provide your business with broader perspective into a consumer’s creditworthiness to support stronger risk-based decisioning,” the firm said.
Trust Science secured more than just financial support this week, gaining backing from a former industry leader who “has already opened doors, at the highest levels, that were previously impenetrable.”
The provider of underwriting support powered by artificial intelligence announced an equity investment by Donald Guloien, the previous president and chief executive officer of Manulife Financial, which is the parent of John Hancock in the U.S. and one of the largest insurance and asset management companies in the world.
Since retiring, Guloien has been “investing in early stage companies with truly exceptional ideas” through Guloien Capital.
Guloien went on to say in a news release, “Trust Science addresses a fundamental issue that companies deal with all the time: How to assess the reliability and creditworthiness of individual customers and counter-parties. This issue is even more daunting when dealing internationally, where conventional scoring may be inconsistent, unreliable or completely unavailable.
“This rapidly growing service seeks to level the playing field for all the world's citizens to be fairly considered for commercial transactions,” he added.
During his 36 years at the company, Guloien participated in the consistent growth of Manulife and John Hancock across the United States, Canada and Asia, reaching more than $1 trillion of assets under administration and a $50 billion market cap.
Guloien’s leadership did not go unnoticed, being voted as one of the highest rated CEOs by Glassdoor.com.
And now he’s throwing his support toward Trust Science and its product Credit Bureau 2.0.
Trust Science explained that it sifts prime borrowers and insurance applicants from wrongly scored subprime applicants in a legally compliant manner. Trust Science informs its machine learning engine by gathering inclusive, alternative, unstructured data and consumer-consented data from among other sources their mobile phones.
An applicant’s social map is part of the uniquely powerful matrix of insights that Trust Science has developed that can help underwriters with both decisioning and also with marketing outreach.
“It is truly a privilege to have someone of Mr. Guloien’s caliber and discipline help with our explosive growth,” Trust Science CEO Evan Chrapko said. “Donald’s previous experience, advice and contacts will be invaluable as we expand the reach of Credit Bureau 2.0 around the world and into other verticals.
“He has already opened doors, at the highest levels, that were previously impenetrable,” Chrapko added.
It’s likely not unusual for underwriting departments at subprime auto finance companies to see applications from individuals who work multiple jobs to generate their income.
Well, according to a new Bankrate.com report, that’s not just common in the subprime space. “Side hustles” permeate much of the American employment arena.
The report indicated nearly half of U.S. workers — 45% to be exact — say they earn extra income on the side. Site officials explained this figure includes both full-time (43%) and part-time (51%) workers.
Bankrate.com found the average otherwise employed side hustler brings in an extra $1,122 per month by working 12 hours a week. For most (66%), the extra money accounts for less than half of their monthly earnings.
However, three in 10 say the extra income is needed to pay regular living expenses. Slightly more (34%) say they use the money for discretionary spending, and 27% say it’s to boost their savings.
“Though the economy is strong, many Americans are finding it necessary to work on the side in order to make ends meet,” Bankrate.com analyst Amanda Dixon said in a news release. “The good news is, whether you need to put in extra hours to pay the bills or pad your savings account, finding a side gig has never been easier.”
Bankrate.com noted that most side hustlers, especially younger adults, view technology as a vital part of the gig economy.
More than three-quarters (78%) say technology plays a role in their ability to earn extra money, including 51% who say it plays a major role. The site said 84% of millennial side hustlers (ages 23-38) and 79% of Gen Xers with side jobs (ages 39-54) say technology helps them earn money on the side, compared to 67% of Baby Boomers (ages 55-73).
Bankrate.com added that millennials are the most likely generation to take advantage of the gig economy, overall. About half (48%) of 23- to 38-year-olds say they earn extra money on the side. That number drops to 39% of Gen Xers and 28% of Baby Boomers.
The site went on to mention 40% of millennial side hustlers say they earn at least half of their income from side jobs, compared to 22% of Gen Xers and 9% of Baby Boomers. Millennials are also more likely than their elders to say that the additional money is income for savings (31% versus 16% of Gen Xers and 18% of Baby Boomers).
Older generations, on the other hand, are more inclined to use the extra money as disposable income for spending (40% of Gen X and 38% of Baby Boomers, versus 31% of millennials), according to the report.
For many, Dixon highlighted that a side hustle not only represents a way to earn extra money, but also an outlet to explore — and profit from — interests beyond their day jobs. In fact, she pointed out that more than one-quarter (27%) say they are more passionate about their side hustle than their main job/career.
“Side hustles are obviously a great way to earn extra money, but they also provide an opportunity to turn a passion or hobby into something more than that,” Dixon said. “Technology has leveled the entrepreneurial playing field, so there’s no limit to what a good idea and hard work can produce.”
The complete report can be downloaded here.
Davis & Gilbert partner Joseph Cioffi reiterated his position that subprime auto finance portfolio performance is expected to deteriorate soon.
Cioffi first made that assertion through a 360-degree market study released by Credit Chronometer, a microsite he authors. Nick asked him to elaborate during this podcast recorded during the National Automotive Finance Association’s annual conference in June in Plano, Texas.
The full episode can be found below.
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Finance companies, especially ones that participate in the non-prime and subprime spaces, often gather as much information as possible during the underwriting process before a funding decision, making the potential of alternative data even more dramatic.
George Coutros, the head of analytics, product and data management at Clarity Services, described how much more robust alternative data is nowadays. Coutros joined Nick for this podcast recorded during the National Automotive Finance Association’s annual conference in June in Plano, Texas.
The full episode can be found below.
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No doubt, both dealerships and their customers want to know ASAP if an application will be approved and a retail installment contract will be bought by the finance company.
Well, the newest initiative from Consumer Portfolio Services is using that exact acronym.
To speed the process for dealers entering and changing loan structure values, CPS recently launched Automated Structure Approval Program — ASAP. The subprime auto finance company explained the portal can allow dealers to enter and “test/toggle” any vehicle and all aspects of the sale terms including vehicle price, down payment, APR, contract term, amount financed and monthly payment.
CPS indicated in an announcement that the portal approves or declines and prices the structures instantly and shows the dealer how much they will receive in funding proceeds.
“Prior to launching this portal, the process for entering and changing deal structures with CPS was mostly manual and a bit clunky,” CPS senior vice president of sales Curt Powell. “This is really a big step forward in our campaign to improve dealer service.”
Powell pointed out the CPS deal structure portal is available to dealers via a hyperlink from Dealertrack and RouteOne approval notices.
“The link makes it super easy. Dealers don’t need a separate sign in to the CPS site,” Powell said.
Powell added this latest project is part of CPS working to create a “best in class” online experience for dealers. He mentioned CPS is also improving its online dealer messaging to make the program “clear and easy” to use.
CPS currently works with more than 8,000 franchised and independent dealers nationwide each month in providing auto finance programs for credit-challenged customers.
This week, SubPrime Auto Finance News secured the affidavit connected with an FBI investigation of a South Carolina Mitsubishi dealership containing scathing details about store management manipulating trade-in values, down payments and income figures in an elaborate fraud scheme that might have impacted at least eight finance companies.
Investigators said witnesses who claim to be a former manager and another employee at Hoover Mitsubishi asserted that two other managers along with the store owner executed the fraud scheme that allegedly ran from November 2013 through last August.
The affidavit indicated the specific finance companies allegedly impacted included:
— AmeriCredit
— Santander
— Global Lending Services
— Exeter Finance
— PNC Bank
— Ally Financial
— Skopos Financial
— Veritas Credit Union
The FBI said in the affidavit that one witness told investigators Veritas Credit Union, which is based in Canton, Miss., “was particularly taken advantage of because Veritas Credit Union blindly matched any financing offer submitted by Hoover Mitsubishi.” The witness added one of the conspirators would “produce and submit fake approval documentation of a competitor to Veritas Credit Union, thereby compelling them to match the offer.”
How the fraud happened
According to the affidavit, the fraud orchestrators prepared two retail installment contracts, with one of the documents containing details about a “phantom” trade-in or down payment. One document was retained in the store’s accounting department and the other stored in a closet somewhere else at the dealership.
FBI investigators learned from a witness that the dealership misled the finance companies by manipulating manufacturer rebates on new models to appear as a customer’s down payment as well as inflating the applicant’s income. The witness said a manager would use a computer at the dealership to produce false cash receipts to fulfill finance company stipulation as proof of down payment, according to the affidavit.
When a trade-in allegedly was involved, the FBI affidavit indicated the applicant’s average interest rate would be lowered by 5%, but Hoover Mitsubishi kept much of that amount to increase gross profit.
Another cooperating witness told FBI about personally paying a store employee to fabricate false proof of residency for potential customers. That witness acknowledged having paid $20 per instance for the employee to generate a fabricated South Carolina Electric and Gas bill to show customer lived at the same residence a co-signor.
This process happened approximately 10 to 15 times during the timeframe of the alleged fraud, according to the affidavit.
The first witness “believed that many customers would never have been provided a loan had it not been for the doctored paperwork.”
The FBI learned from the witnesses that Hoover Mitsubishi retailed 50 to 60 vehicles monthly with approximately 30 of those units connected to the fraud schemes. “Between 2014 and 2018, (the witness) stated that both he and almost every employee of Hoover Mitsubishi benefitted financially from the schemes,” according to the affidavit.
The affidavit included an example of how one of the eight finance companies targeted in the scheme might have added fraudulent paper to its portfolio.
The document stated on approximately Sept. 5, 2016, PNC Bank funded the contract for a vehicle purchased retailed by the Hoover Automotive Group. PNC Bank bought the paper valued at $53,236.
“Approximately six months after the loan was granted, the borrower informed PNC Bank that the income reported on his car loan application was deliberately inflated by the Hoover Automotive Group,” the affidavit said. “In addition to more than doubling his income, the loan application also reported the borrower owned his residence, which was not true.”
Not all applications were approved
The FBI shared through the affidavit a pair of instances where additional due diligence during the underwriting process stopped a contract from being funded.
On approximately Sept. 25, 2015, the affidavit indicated Regional Acceptance declined to fund a contract worth $20,258.50 for a 2015 Mitsubishi Outlander Sport via a delivery Hoover Mitsubishi tried to complete. Regional Acceptance is a subsidiary of BB&T Bank that typically caters to consumers in the subprime credit space.
“After reviewing the loan application and supporting documents to include a suspicious pay stub, Regional Acceptance Corporation contacted the borrower to verify income. The borrower advised he had not provided a pay stub to Hoover Mitsubishi,” the affidavit read.
After contacting one of the alleged conspirators, “Regional Acceptance Corporation ultimately concluded the pay stub was fabricated by Hoover Mitsubishi personnel because the style of the pay stub was similar to that of other borrower’s pay stubs submitted previously,” according to the FBI document.
Investigators recounted another instance earlier in 2015 involving Capital One Auto Finance.
On approximately May 27, the affidavit said a customer attempted to secure financing for a vehicle purchase through Hoover Mitsubishi, which sent documents to Capital One stating the applicant resided at the same residence as the co-applicant.
“However, when the bank contacted and interviewed the applicants for a pre-funding interview, it was learned applicants did not reside together. The bank concluded the information was intentionally distorted in order to qualify for the loan,” the affidavit stated. “In this matter, no loan was provided due to misrepresentation on the loan documents and potential fraud.”
Black Book recently rolled out its latest solution for auto finance professionals — Asset Verification Tool — which is designed to help protect finance companies, auction and dealers against vehicle misrepresentation by providing insight on vehicle trim and equipped options.
By confirming the trim and options on a given vehicle, Black Book emphasized a finance company can be confident in the calculated loan-to-value (LTV) ratio. An accurate LTV can help mitigate risk throughout the contract lifecycle and ensure the proper collateral value is used in risk assessment.
Black insisted its new Asset Verification Tool can provide auto finance company with a “trusted” source for vehicle verification. With the click of a button, finance companies can verify the trim level and options on the vehicle, preventing a fraudulent transaction in a more time-efficient manner.
Black Book also provides the data included in Asset Verification Tool as an API for direct integration with automated approval systems or loan origination systems.
And it appears the tool already is being well-received.
“We are excited to work with Black Book to enable industry-leading resources leveraging sophisticated data solutions that alert to red flags for lenders and minimize fraudulent loan opportunities,” Flagship president and chief operating officer Jeff Haymore said in a news release.
“Asset Verification Tool from Black Book protects everyone involved, from the lender to the consumer and the dealer, with quick and easy collateral verification capability,” Haymore continued.
Asset Verification Tool uses Black Book’s Enhanced Vehicle Matching (EVM), a precise VIN-level identification process powered by machine learning and OEM build data that matches 17-digit VINs to a single trim and any applicable add/deducts.
“Asset Verification Tool provides lenders the ability to verify trims and options in a single click, drastically reducing risk,” Black Book executive vice president of revenue Jared Kalfus said. “With Asset Verification Tool, lenders can ensure accurate collateral representation and reduce time spent in manual verification processes.”
For finance companies that like to book as much used-vehicle paper as they can originate, the latest Experian data shows institutions are not having to take on as much risk to fill that portion of their portfolio objectives.
Findings from the Q1 2019 State of the Automotive Finance Market report showed that the percentage of consumers choosing used vehicles reached all-time highs. Analysts noticed the figure for prime hit 61.88 percent, and the super-prime reading reached 44.78 percent.
Experian explained in a news release distributed on Thursday morning that this trend comes as questions around vehicle affordability continue to dominate industry conversations.
The average amount financed for a new vehicle surpassed $32,000 in Q1, while the average amount financed for a used vehicle was slightly above $20,000. Additionally, the average monthly payment for a new vehicle was $554, and the average monthly payment for a used vehicle was $391.
“While vehicle affordability continues to be top of mind for the industry, consumers are actively seeking ways to ensure they can afford the vehicle they purchase — a positive sign for all parties involved,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions.
“It’s important that lenders and dealers continue to monitor these trends so they can work with car shoppers to help them find the right vehicle with the right financing options,” Zabritski continued.
The other side of the affordability conversation has focused on delinquency trends.
In Q1, Experian reported 30-day delinquencies saw an increase to 1.98 percent, up from 1.9 percent a year ago. That said, banks, credit unions and finance companies all saw slight decreases in 30-day delinquency rates, and 60-day delinquencies remained relatively stable at 0.68 percent year-over-year.
Zabritski pointed out that it’s important to keep in mind that the 30-day delinquency rate is still below the high-water mark in Q1 2009 when it soared to 2.81 percent during the Great Recession.
“The delinquency rate is certainly a trend worth keeping an eye on, but it’s important to consider it within the larger historical context,” Zabritski said. “Other factors, like subprime originations remaining at historic lows, help paint the full picture of the industry.”
Experian mentioned additional findings for Q1 included:
• Outstanding automotive balances totaled $1.181 billion.
• The percentage of outstanding loan balances held by subprime and deep-subprime consumers dropped below 19% (18.77%).
• Credit scores remained stable, with some improvement seen in used, which increased from 655 to 657 year-over-year. The average new credit score (719) is the same as Q1 2018.
• Average new loan terms decreased to 68.85 months, while average used loan terms increased to 64.67 months.
• The percent of used vehicles that are leased saw a slight year-over-year increase from 4.01% in Q1 2018 to 4.68%.
• The gap between the average new and used monthly payments continued to widen, reaching $163.
