Tag: EFG Companies

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Business Growth Economy

Lender, Dealer and Consumer Needs Aligned

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

The results of a new poll released in May by The Associated Press-NORC Center for Public Affairs Research state that two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency. According to the poll, this spans all income brackets with 75% of people in households making less than $50,000 a year, 67% of those in households making between $50,000 and $100,000, and 38% of households making more than $100,000 all stating they would have difficulty coming up with $1,000 to cover an unexpected bill.

The poll also states that one of the main reasons for this lack of savings is lack of wage growth. 46% of workers said their wages remained stagnant in the last five years, and 16% said they’ve seen salary cuts. During this time, costs for basic needs such as food, housing and health care have risen.

Furthermore, the poll found that a third of Americans would borrow from a bank, friends, or family, or put the bill on a credit card to pay for it. 13% would skip paying other bills and 11% would not pay the bill at all.

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Categories
Economy

Subprime Storm Clouds on the Horizon

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

The automotive finance industry has been riding a five year high with an average 8.30 percent year-over-year increase in unit sales from 2011 to 2015, according to data from Wards Auto. With the rapid pace of automotive industry growth lending requirements loosened, longer term loans became the norm and subprime lending skyrocketed.

With key market indications shifting, everyone is watching the market carefully, poised to tighten lending requirements. According to Experian, average new vehicle loan terms increased to 67 months in 2015, while used vehicle loan terms increased to 63 months. This has resulted in a significant growth of negative equity on car notes.

According to the NADA Used Car Guide (NADA UCG), the percent of originations, including trades that carried negative equity, increased year-over-year by 2 percent. In addition, NADA UCG also stated that based on data from J.D. Power’s PIN Network, of the cars that had an equity position in 2015 and 2016, the trade-in value decreased by 50 percent. In Q1 of 2015, the average trade-in value for a car was $1,000. By Q1 of 2016, the average trade-in value had decreased to $500.

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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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