Categories
Business Growth

Consumer Communication

Contributing Author: Brien Joyce

 

Contributing Author: Brien Joyce, Vice President, Specialty Channels, EFG Companies

Ask yourself the following questions:

  • How often are your indirect auto loans refinanced within the first 30/60/90 days?
  • Do you consider your offering equal to, or more competitive than, the competition?
  • What differentiation does your offering provide to cut through the clutter and drive auto loan growth and retention?

With a dense auto lending environment from captives to credit unions, dealerships have had their pick when it comes to choosing which loans to push. In fact, dealerships have reduced the number of lenders they work with. According to a recent study from Dealertrack Technologies, the average number of lender relationships has dropped to between 6.9 and 10 lenders. With that in mind, lenders have vied to provide consumers with low rates and dealers with high margins.

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Compliance F&I

How are You Embracing Change?

Karen Klees, Certified Consumer Credit Compliance Professional

 

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

Recently, U.S. Bank issued a letter to its dealer partners describing the bank’s policy with regards to fair and responsible lending. Well, that in itself is not news. Lenders have been issuing letters of this nature for the past few years. However, this letter did mark a significant milestone since the CFPB’s regulation of the retail lending industry. In this letter, U.S. Bank became the first lender to explain a monitoring program with a heavy focus on how F&I products are priced and sold.

To date, even with state regulations on F&I pricing, dealers have had substantial leeway to set their margins. While third-party administrators set risk-based costs for each product, dealers have the opportunity to set their margin based on how much money a lender will advance.

Along with potential reserve for originations, setting F&I product margins is the finance department’s primary way to generate profit. Because of this reliance, dealerships are very concerned about lending oversight. Meanwhile, U.S. Bank is taking what they believe is a proactive step to monitor pricing before any regulatory decisions are made. And, it’s likely that other lending institutions will observe this practice closely to hone their internal best practices.

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Categories
Business Growth

How are You Profiting from Addressing Subprime Consumer Needs?

Contributing Author: Steve Klees

 

Contributing Author: Steve Klees, Senior Vice President, Specialty Channels, EFG Companies

As the nation continues to recover economically, we’ve seen the subprime market steadily expand. The debate rages on whether to slow or halt this expansion before a subprime bubble forms. Be that as it may, more people who experienced hardship over the last few years are returning to dealerships looking to replace their vehicle, or get into a vehicle for the first time.

As you evaluate your institutions’ future, it’s time to step back and take a deeper look at what consumers are dealing with. Yes, the unemployment rate has dropped, but that does not mean everyone who lost their job in the recession has returned to a comparable position. The most recent report from the Bureau of Labor and Statistics states that 6.6 million Americans are classified as “involuntary part-time workers” – those working part-time jobs due to economic reasons.

Now, many Americans who once had, or believed in the future of stable, full-time positions can now only find part-time work, or work for much less pay than they previously received or expected. College graduates are still the most underemployed of all age groups.

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