Tag Archives: auto loan portfolio buyers
Why floorplan lenders should know how dealers receive payments
Floorplan lenders should pay close attention to how their dealership partners receive payments from customers, according to fraud analyst Josh Wortman, data scientist and chief executive of General Forensics.
In an analysis of Department of Justice documents that mention “dealership,” Wortman found 56 unique fraud cases between 2013 and 2019, 75% of which involved dealerships defrauding lenders, consumers or the government. Upon closer inspection, a third of those involved tax evasion or money laundering, including a common trend of failure to properly file IRS Form 8300, the required document for cash deposits of more than $10,000.
Instead, these dealerships use a method called “structured deposits” to hide cash payments, Wortman said. For example, instead of depositing the entire $10,000, the dealership makes two deposits — one for $8,000 and one for $2,000, for example — with false invoices in an attempt to hide the cash sum.
“A floorplan finance company should care about not only did they get paid back for their flooring items, but where does that payment come from,” Wortman said. “Is it cash, or is it electronic?”
Oftentimes, engaging in tax evasion is a sign dealerships are also involved in other criminal enterprises, Wortman explained. “If you have a tax-evasion scheme, it is often the case that [the dealership] is working with drug criminals [trying to launder money that they don’t want to properly report]. Dealers don’t have normal customers and they are not filling out a retail installment contract,” he said.
For floorplan lenders, this practice is worrisome because they are at higher risk of these dealership partners selling vehicles out of trust, Wortman said. “It’s useful to know that your dealership [partner] isn’t on the up-and-up.”
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11 at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, Jan. 31 to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
SoftBank-backed startup Getaround cuts staff
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Colorado dealership investigated for floorplan fraud
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New-vehicle sales top 17M despite OEM declines
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Average new-vehicle prices on pace to reach $36K, data shows
The average transaction price (ATP) for new vehicles is forecast to increase 2.4% year over year, reaching $35,932 as of December 2019, according to ALG data.
New-vehicle ATP’s increased every month last year, largely due to consumers opting for higher-priced vehicle segments such as trucks and SUVs, said ALG’s Chief Economist Oliver Strauss.
Hyundai and Kia showed the highest increase in ATP year over year, up 10.7% to $25,380, and 7.7% to $24,584, respectively. ALG attributes the uptick to the OEMs’ SUVs that “continue to resonate with consumers,” the report noted.
On the other hand, Nissan and Honda are the only OEMs expected to post year-over-year decreases in ATP. Nissan’s ATP is forecast to drop 1.7% to $28,145, while Honda’s ATP is likely to decrease 1.4% to $28,496.
In the luxury segment, BMW’s ATP is anticipated to increase 5.6% year over year to $57,083 — a $3,000 increase. Daimler’s transaction price remains the highest of all the top 12 OEMs at $60,672.
Revenue from new-vehicle sales are also projected to increase by 2.5% year over year, reaching $56 billion for the month.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11, at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Fraud scheme racks up $5.5M in fake loan applications
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December financing rates dip for third straight month
The average interest rates on new-vehicle financing dropped for the third straight month in December 2019 — down to 5.4% — according to Edmunds data. Comparatively, the average APR on new vehicles was 5.9% in the prior-year period. December’s figure is the lowest its been since February 2018.
In addition, the number of buyers who received an APR of less than 3% jumped to 22.4%, compared with 20.4% a year ago. Yet, financiers shouldn’t be too concerned, said Jessica Caldwell, executive director of insights at Edmunds. “People tend to buy luxury vehicles, trucks and SUVs this time of year,” she said, noting that car buyers in these segments usually qualify for the lowest rates.
The average used-vehicle financing rate also posted a year-over-year decline, falling to 8.2%, compared with 8.7%.
For more content like this, join us at the upcoming Auto Finance Accelerate event, March 9-11, at the Omni San Diego. Combining three crucial topics in auto lending and leasing, Auto Finance Accelerate dives into the strategies and knowledge needed to enhance your company’s auto finance sales, marketing, and innovation. Register before Friday, January 31st to save with early registration rates. Visit www.AutoFinanceAccelerate.com to learn more.
Goldman Sachs provides $10M credit line to Dallas auto lender
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Byrider partners with fraud consortium