Comments on: What’s Happened to the Market for Auto Loans? http://iltech.us/blog/whats-happened-to-the-market-for-auto-loans/ Just another WordPress weblog Tue, 24 Aug 2010 16:35:55 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Scott Williams, COO http://iltech.us/blog/whats-happened-to-the-market-for-auto-loans/comment-page-1/#comment-205 Scott Williams, COO Mon, 21 Jun 2010 15:29:27 +0000 http://iltech.us/blog/?p=20#comment-205 We agree with the principles put forth by your article and offer the following "case study" as proof points. We launched a de novo indirect auto lending program in December 2009. Our success is derived from two major elements: emphasis on used auto loans (vs. new) and "service" (please don't laugh). We originate more used auto loans through the design of the program itself. We acknowledged upfront that long term there is no way to compete with the captive finance companies. Underwriting, LTV's, cutoff scores, terms, rate-tiers, etc., all play a part to give us an 80/20 mix of used/new auto loans. Our service gets delivered through our dealer rep and our underwriter -- they have combined experience of 20+ years. Our rep hand-selected 10 dealers within the local market and calls on them frequently -- delivering loan files, providing supplies and running interference on loan "stips" and "problem" loans. The dealers also have easy access to our underwriter in the event of a rehash or a question. Our turnaround time for loan decisions is currently 31 minutes -- good, but we are working to reduce this further to 15 minutes. So far, our loan volume has exceeded expectations; average FICO has been consistent at 680-690; average yields are much higher than anticipated. In addition, we have not had to pay the highest reserve to the dealers. Knock on wood -- so far, so good. We agree with the principles put forth by your article and offer the following “case study” as proof points.

We launched a de novo indirect auto lending program in December 2009. Our success is derived from two major elements: emphasis on used auto loans (vs. new) and “service” (please don’t laugh).

We originate more used auto loans through the design of the program itself. We acknowledged upfront that long term there is no way to compete with the captive finance companies. Underwriting, LTV’s, cutoff scores, terms, rate-tiers, etc., all play a part to give us an 80/20 mix of used/new auto loans.

Our service gets delivered through our dealer rep and our underwriter — they have combined experience of 20+ years. Our rep hand-selected 10 dealers within the local market and calls on them frequently — delivering loan files, providing supplies and running interference on loan “stips” and “problem” loans. The dealers also have easy access to our underwriter in the event of a rehash or a question. Our turnaround time for loan decisions is currently 31 minutes — good, but we are working to reduce this further to 15 minutes.

So far, our loan volume has exceeded expectations; average FICO has been consistent at 680-690; average yields are much higher than anticipated. In addition, we have not had to pay the highest reserve to the dealers.

Knock on wood — so far, so good.

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