Category: F&I

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Business Growth F&I

Don’t Let Delinquency Keep You Down

Mark Rappaport President EFG Companies
Contributing Author:
Mark Rappaport
President
Simplicity Division
EFG Companies

Currently, the headlines are offering a lot of doom and gloom for the subprime auto finance market with regards to rising auto loan delinquency rates and the sheer amount of subprime paper.

According to the February Equifax National Consumer Credit Trends Report, 21.7 percent of all auto loans originated between January and November, 2015 were issued to consumers considered to be in the subprime market.

This marks the fourth year where the subprime segment accounted for between 21 and 22 percent of all auto loans.

In addition, Fitch Ratings reported that in February, 60-day delinquencies experienced a 12 percent year-over-year increase, bringing the delinquency rate to 5.16 percent. This is the highest delinquency rate since October, 1996. To put this into perspective, delinquencies peaked at 5.04 percent during the 2008 financial crisis.

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Categories
Business Growth F&I

Your Role in Shortening the Dealership Sales Process

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

One of the most discussed topics over the last few years within the auto retail industry has been how to shorten the sales cycle within dealerships. Dealers have invested time and money into training initiatives, enhancing their technology capabilities, and in creating an online showroom. Even with all these initiatives, they are still struggling to achieve their goal.

According to a recent survey by eLEND Solutions, 85 percent of dealers say they want a sales process that lasts less than two hours. But, 42 percent report it usually takes three to five hours to sell a car. Now, why is this important to lenders?

One hypothesis is that those dealers who achieve significant reduction in the time it takes to sell a car will see more foot traffic, referrals and repeat customers, meaning more opportunity to increase indirect loan volume. In addition, by acting as a partner with dealers in this endeavor, it further fortifies the lender-dealer engagement, potentially resulting in increased loan volume and longer-term relationships with successful dealers.

It’s always important to remember that dealership success equates to lender success. So why shouldn’t you be invested in your success?

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Compliance F&I

Prepared for F&I Product Compliance?

Steve Roennau Blog Headshot

With the Consumer Financial Protection Bureau (CFPB) quickly ramping up its influence over auto-finance, it is widely expected that F&I products will be the next area of scrutiny. As a lender, there are a few ways to proactively prepare your institution for this next step in CFPB regulation.

The first, and most obvious step is to set limits on how much you’ll fund for the sale of F&I products. Be aware, however, that as the CFPB is reducing the dealer profit from rate markup, dealers will be looking to maximize profit from F&I product sales. They will be looking for lenders who are competitive with their funding options. Look at your entire compensation plan to ensure that it not only promotes consistent pricing, but also fairly and competitively compensates the dealer for the business.

As with all of the vendors that a lender uses, the CFPB is likely to require lenders to vet all product administrators. Savvy lenders are reviewing the contracts to get a better view into the product administrator’s practices, and their customer service standards.

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