DriveTime passed another juncture on its “longer-term corporate roadmap” on Tuesday as the company continues to pivot away from the traditional buy-here, pay-here model of selling, financing and servicing vehicle sales to subprime customers.
Tuesday marked the official launch of Bridgecrest Acceptance, a licensed third-party servicer for servicing installment contracts for DriveTime and other affiliated finance companies. DriveTime vice president Greg Sax explained to SubPrime Auto Finance News how the company arrived at this point; a journey that began nearly a decade ago.
In 2007, DriveTime started to include prices on its vehicle window stickers in an effort to have a “no-haggle” atmosphere at dealerships. Then three years later, the company removed collectors from dealerships as customers no longer had to make their installment payments at a DriveTime store. When 2013 arrived, DriveTime chose to unbundle its ancillary products and made them optional during the financing process.
Now this week, the company separated its brands with DriveTime representing the retail side and Bridgecrest Acceptance designating the servicing side.
“It’s been on our roadmap for a long time now to get to this point,” Sax said.
Sax highlighted that DriveTime formed a project team last summer and that group went to work beginning in October to get Bridgecrest Acceptance ready for business. The team had to ensure processors at retailers such as Walmart recognized the new servicing brand so customers received proper credit for payments. The group also revamped the website where customers managed their accounts.
Now, all retroactive and new installment contracts that were previously serviced by DriveTime Acceptance Corp. now will be serviced by Bridgecrest Acceptance. That portfolio currently consists of more than 220,000 accounts.
On the remarketing side, Sax also told SubPrime Auto Finance News about how much work had to be completed so dealers at auctions would recognize Bridgecrest Acceptance now represents DriveTime, “ensuring our usual buyers who come to the auctions for the DriveTime products now know that our new name is Bridgecrest for a seamless transition so we get the same participation at the auction as we always would.”
While the company has made a wide array of changes with respect to Bridgecrest Acceptance, Sax shared what parts are remaining constant.
“On the underwriting front, we aren’t making any changes on how DriveTime handles its risk management and underwriting policies and practices,” Sax said. “Our proprietary credit grading model that’s on generation eight now — that’s the backbone to all of the centralized risk management decisioning that we do — that’s staying the same.
“All of the underwriters in our dealerships and the policies and procedures they follow will be the same,” he added.
As a third-party servicer, Bridgecrest Acceptance can still keep a connection to its BHPH roots as the structure of the company can give it the option of purchasing bulk portfolios from dealers.
Might Bridgecrest Acceptance venture into the indirect space, too?
“We’re not positioning Bridgecrest that way,” Sax replied. “We will continue to service loans originated by the DriveTime dealership base. We’re not looking to get into the indirect space.
“I would view Bridgecrest simply as an end-to-end servicing company that can do everything from your customer service and early delinquency disciplines all the way to your back-end collections recovery, skip-tracing, repossession and ultimately remarketing of vehicles at auction,” he continued. “That’s really what Bridgecrest is about, that servicing operation in an end-to-end capability.
“While we’re not actively pursuing outside portfolios today, it opens up the possibility in the longer term that we could do that if we chose to,” Sax went on to say.
In order to handle the volume generated by DriveTime stores as well as the possibilities farther down its corporate road, Sax shared that the Bridgecrest Acceptance already is working on a collections systems to be rolled out later this year or early in 2017. Bridgecrest Acceptance also expects to hire more personnel for both of its operations centers in Mesa, Ariz., and Dallas; a minimum of 20 people each month through the end of the year to fulfill growing loan servicing needs.
Whether its seasoned employees or new additions, Sax emphasized another element of Bridgecrest Acceptance’s workforce.
“Obviously compliance is at the forefront today, especially when you’re looking at the servicing side of the business,” Sax said. “DriveTime and Bridgecrest have a very strong focus and commitment on compliance.
“Our view of it is that the better we get at it, the bigger of a competitive advantage it will be in the future for us,” he continued. “Companies have to have a pretty strong commitment as well as the resources and ability to invest on the compliance side to be a leader in the space.
“We feel as we continue to get out in front of it — the more that we are able to move that ball forward — the more it separates us from others in the servicing space,” Sax added.