Tag: EFG Companies

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Business Growth

Your Dealer Relationship Checklist

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

You’ve implemented strong technology solutions to provide dealers with automatic approvals and denials. You’ve created robust mobile applications to foster strong relationships with consumers. You might even have gone completely digital with all loan services. In the race to provide dealers and consumers with instant credit descisioning, have you lost the human element of building relationships?

According to J.D. Power and Associates’ 2017 U.S. Dealer Financing Satisfaction Study, lenders need to refocus on communication and dealer relationships. This annual study measures dealer satisfaction with auto financing providers, based on application and approval processes, provider offerings, and sales rep relationships among other factors.

It’s time to get back to basics when it comes to developing business relationships, especially with auto loan originations on the decline. TransUnion announced that auto originations fell for the third consecutive quarter in their most recent quarterly Industry Insights Report.

So, what does it take to develop strong dealer relationships? When pondering this question think beyond quick loan descisioning and interest rates. It takes superior service and a strong value proposition.

  • When an F&I manager calls about an application, are they met with a phone tree or an actual person?
  • Are your loan officers courteous and respectful when speaking with dealership personnel?
  • If your system flags a loan application as incomplete, do your loan officers just ignore it and assume the dealer will figure out the mistake when no funding decision is made, or do they proactively call dealers to address the application?
  • Does your auto financing department operate on dealership hours or banking hours?
  • When your representatives visit dealerships, do they just drop off donuts and coffee, or do they make a point to sit down with dealership management and discuss how your institution can be a better partner?
  • How often does your institution proactively provide in-person training and updates on your loan requirements, taking into account the high-turnover nature of retail automotive?
  • Aside from APR, how is your auto loan different from the competition?
  • Do your loans make it easier for F&I managers to upsell consumer protection products to boost their margins?
  • Do your loans provide consumers with value that insulates them from significant impacts to their savings?
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Business Growth Compliance Featured

Staying Ahead of the CFPB Arbitration Rule

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

When the CFPB was created, the Dodd-Frank law gave the CFPB authority to study mandatory, predispute arbitration agreements. Before the CFPB could do anything, they needed to conduct this study, report to Congress, and then propose whatever rule they deemed in the consumer’s best interest.

Last summer, the CFPB proposed a rule that would limit finance companies’ ability to use mandatory predispute arbitration agreements. Under the proposed rule, consumers would not be prohibited from participating in a class-action law suit. The CFPB also put a provision in the proposed rule that would require companies to report individual arbitration awards to the CFPB.

On July 10, 2017, the Consumer Financial Protection Bureau announced its final version of the rule on arbitration. The final rule has almost all of the exact same provisions as the proposed version from last summer.  The rule specifically states that while finance companies may use arbitration agreements, they are prohibited from preventing consumers from engaging in a class action law suit.

This week, the U.S. House of Representatives voted 231 – 190 to revoke the rule, using authority under the Congressional Review Act. A similar resolution is on tap to be debated in the Senate in the coming weeks.

While the rule is currently under debate, lenders everywhere await very eagerly for the final outcome. In the auto finance industry, the rule could put both dealers and lenders at a greater risk for class-action law suits.

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Uncategorized

Is Your Auto Loan Affordable?

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

According to a recent study from Bankrate.com, the average new-car price tag is too high for the majority of medium-income U.S. households. Here’s the breakdown:

In May, Kelley Blue Book updated the average new-vehicle transaction price to $33,261.

Using that transaction price, Bankrate applied the traditional 20-4-10 rule to conduct the study – i.e.:

  • a down payment of 20 percent
  • a four-year loan
  • principal, interest and insurance payments accounting for 10 percent of the household’s gross income

From looking at your own portfolios, you probably know that the majority of American consumers don’t put 20 percent down on their vehicle, and they are often financing for upwards of seven years. The fact that consumers don’t use the 20-4-10 rule should give you a good picture of the state of American finances in comparison to vehicle prices.

It should come as no surprise that Bankrate’s study came back showing that only one metro area could afford the average-priced new vehicle – Washington, D.C., where the median income is nearly $100,000.

Despite the fact that, according to Bankrate, most households can’t afford to purchase a new vehicle, new unit sales are still on par with last year’s levels. The most recent LMC Automotive/J.D. Power forecast puts 2017 new vehicle sales volume in the low 17 million-unit range for the year.

Continue reading “Is Your Auto Loan Affordable?”