One subprime auto finance company is absorbing much of the portfolio of another provider.
On Thursday, Nicholas Financial announced today that it has entered into an agreement with Platinum Auto Finance to acquire approximately $19 million of Platinum’s active and performing portfolio.
According to a news release, this deal is the third bulk portfolio purchase of Platinum Auto Finance’s receivable base in as many months. Nicholas Financial indicated the first bulk purchases were $1.1 million and $0.9 million, respectively, laying the groundwork for this much larger acquisition.
“We have had a positive relationship with Platinum for some time now, and we are pleased we could see this acquisition through,” said Doug Marohn, president and chief executive of Nicholas Financial, which is a branch-based subprime auto finance company focused on servicing the needs of local, independent dealerships.
“Bringing over this portfolio to Nicholas increases our indirect portfolio by approximately 10% and will be immediately accretive,” Marohn continued. “It also frees up liquidity for Platinum as they look to further their own strategic initiatives.”
In addition to these transactions, Nicholas noted that it has been working together with Platinum on several joint ventures during the last several months. These joint venture initiatives include cross-marketing, application pass-throughs and other related projects.
“We are excited to continue to build our relationship with the Nicholas Financial Team,” Platinum Auto Finance CEO Michael Kaplanis said.
“Our companies share a core philosophy to structure transactions that set up consumers for success and we complement each other strongly in our approach to providing great service to our dealer clients and customers,” Kaplanis went on to say.
Nicholas Financial is coming off the third quarter of its fiscal year that included a 15.2% rise in originations while its 60-day delinquency rate dropped to 4.0% from 5.7% a year earlier.
“We are very pleased with the progress we have been making overall, and particularly pleased with the progress in our third quarter of fiscal year 2020. On both new indirect contract purchases and direct loan volume we have outpaced year-over-year results for the third quarter and year to date,” Marohn said.
“Our targeted efforts to improve same store sales, rollout our direct loan product to more states, continue new market expansion and be open to other strategic partnerships is yielding positive results,” he continued.
“Our expansion efforts are underway in Las Vegas, Nevada in addition to the other areas previously identified,” Marohn added. “We are in the process of initiating expansion in Salt Lake City, Utah, Boise, Idaho, and Des Moines, Iowa; just to name a few.”