Tag: vsc

Subprime Storm Clouds on the Horizon

Post author By efgmarketing
Post date May 24, 2016

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.

Tags EFG, EFG Companies, Experian, Mark Rappaport, NADA, NADA UCG, NADA Used Car Guide, vehicle return, vehicle service contract, vsc, Wards Auto

Business Growth F&I

Your Role in Shortening the Dealership Sales Process

Post author By efgmarketing
Post date March 17, 2016

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?

Tags dealership sales, EFG, EFG Companies, F&I, Finance & Insurance, vehicle service contract, vsc, walkaway

Business Growth Economy

Don’t Let Interest Rates Dictate Your Loan Volume

Post author By efgmarketing
Post date January 6, 2016

Brien Joyce
Vice President
EFG Companies

In a widely anticipated decision, the Federal Reserve voted to raise interest rates this past December by 25 basis points.

And, of course, one of the first industries that will be affected by this rate hike is auto finance. As you re-assess your lending portfolio to take into account the new rates, it’s also the perfect time to evaluate how to differentiate your institution beyond rate alone.

With the interest rate hike, we can expect retail auto sales to begin to plateau in 2016. It wouldn’t be surprising to see little to no growth in overall unit sales next year. This trend will shape dealer business, as they will begin focusing more on customer retention and brand enhancement. This refocusing offers lenders the chance to differentiate their institution and grow loan volume through their engagement with dealers. The more business a given dealer has, the more opportunity you have to increase loan volume. Therefore, every lender should ask themselves, “How am I helping my dealer partners achieve their business goals?”

Tags EFG Companies, Federal Reserve, Interest Rates, Rate Hike, Steve Klees, vehicle return, vehicle service contract, vsc