TransUnion senior vice president and automotive business leader Jason Laky indicated auto refinancing still is a “small” portion of all new quarterly originations. However, start-up companies such as SpringboardAuto.com are aiming to boost the volume figure by creating online opportunities for consumers to apply for refinancing anywhere, anytime and receive a response in seconds.

During a conversation earlier this week with SubPrime Auto Finance News, Laky estimated that auto refinancing composes about 5 percent to 10 percent of quarterly originations.

“But we’ve seen it grow year-over-year since 2010,” Laky said. “We believe that this is a combination of both a favorable interest rate environment as well as more lenders seeing auto refinancing as an opportunity to create value for consumers, especially when consumers have long-term loans.”

Long-term contracts certainly are the norm nowadays. Experian Automotive’s first-quarter data indicated the average term for a subprime borrower who financed a new vehicle came in at 72 months. If a subprime buyer made a financed purchase of a used vehicle at a franchised dealer during Q1, the term was 67 months. If the subprime used-vehicle transaction took place at an independent store, the average term was 56 months.

Perhaps if those subprime borrowers improved their credit standing after a time, they might seek refinancing options to reduce their monthly payment. Laky explained how TransUnion can keep track of originations that are, in fact, refinancing deals.

“One of the criteria is a different lender,” Laky said. “This isn’t modifying a loan for an existing consumer as much as it is this conquest piece.

“When we see it, it tends to be certain finance companies that specialize in auto refinance as opposed to offering it side-by-side with an indirect program. It can be hard to do both,” he continued.

Companies such as SpringboardAuto.com are trying to reduce the difficulty of obtaining financing altogether.

Unlike the traditional refinancing process that only has static single terms (such as a fixed interest rate and payment), SpringboardAuto.com insisted that it can put the consumer in control of displayed loan term options. The application process is automated, transparent and can be done 24/7 from anywhere using a smartphone or computer.

SpringboardAuto.com chief executive officer Jim Landy explained that approved consumers configure selected financing terms to meet their individual objectives, which can be to lower an existing monthly payment or reduce the amount of interest paid. Landy also stressed there’s no obligation to commit and no impact on a consumer’s credit score to receive an offer.

“Refinancing an auto loan shouldn’t involve any smoke and mirrors. We educate buyers up front on interest rate, loan duration and even include a slider tool to help them see how more or less money down changes the terms of the loan,” he said.

“The bottom line: We will either be able to give a consumer a loan that better meets their needs or not,” Landy continued. “If not, there’s no harm to the consumer’s credit score and no obligation.”

During the refinance process, SpringboardAuto.com can provide a side-by-side presentation of the consumer’s estimated current loan compared to their new loan term preferences; and, because there is full transparency, the consumer knows if the loan is beneficial or not.

“The reasons to refinance are unique to every individual — it might be that you’re about to become a new parent and the costs associated with the new baby mean you really need a lower monthly payment, or perhaps you’re ready to shorten the loan duration and pay the vehicle off faster. Whatever the need, our tool lets you easily configure the loan to fit,” Landy said.

SpringboardAuto.com’s refinancing auto loans are available via website or smartphone. The company leverages technology, data and analytics to expedite and secure the entire financing process.

Once approved and the contract configured, SpringboardAuto.com can guide the borrower through the rest of the refinance process and the loan agreement is signed online for everyone’s convenience.