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CPS Revamps Dealer Portal for Release in Early 2019


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Subprime lender Consumer Portfolio Services is boosting dealer self-service options, with a revamped portal slated to debut early next year.

“We’re rebuilding the dealer portal, so the dealer can go in and play around with the [loan] structure until he gets one that he likes, and we accept, without having to call a buyer and negotiate a structure over the phone,” Teri Robinson, CPS senior vice president of originations, told Auto Finance News.

The changes to the dealer portal are expected to go live in the first quarter of 2019. The company’s goal is to offer more self-service and digital channels.

“There are a lot of dealers who like the touchy-feely, who want to call and talk to us, but there are probably even more who feel like, ‘Let’s get this going, I need an answer now’ and they’ll sacrifice a human voice for the opportunity to do it themselves,” said Robinson.

Despite the economic downturn on the horizon in late 2019 and into 2020,  CPS expects originations to rise next year. “In 2019, we’re poised to have steady growth,” Robinson said. “We will continue to use our updated scorecard to grow the business in ways that won’t affect credit quality.”

Also, CPS plans to introduce a preferred dealer program next year. “We’re recognizing good dealerships by giving them the ability to talk to a special buyer, special funder, and fast-track their funding packages,” she said.

Preferred dealers will be able to send funding packages electronically to expedite the funding process. “We’re trying to give them the best customer service because they give us good paper and we want more of it,” she added

In addition to exploring more ways to use alternative data, Robinson said the company is planning more mobile functionality for dealers and consumers. Currently, mobile features include the ability to download applications, apply for loans, submit paystubs, request payoff quotes, and make payments.



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TrueCar Releases Tool to Guarantee Trade-In Values


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Online car-pricing service TrueCar has launched a trade-in valuation tool meant to drive consumers to its dealer partners and, subsequently, boost origination volume for lenders. Consumers plug information about their vehicles into the tool, which then generates a guaranteed trade-in value powered by Galves Accu-Trade.

“We’re able to take that information, which is inclusive of the mileage and current conditions in need of repair, and we’re able to give a live offer for a vehicle that is redeemable at any dealer within our network,” TrueCar Executive Vice President Brian Skutta told Auto Finance News.

TrueCar’s Affinity Auto Buying program partners, which include USAA Bank, JPMorgan Chase, and American Express, will match the valuations.

“If we put a valuation of $10,000 on a car and once the consumer has sold the car to the dealer, if for whatever reason the dealer didn’t want that car, they could sell it to us for the same $10,000 paid to the consumer,” Skutta said.

The feature, called TrueCar Trade, piloted in April at 100 dealerships throughout New York, New Jersey, and Pennsylvania. Earlier this month, it was rolled out nationwide. Currently, 600 dealers are using TrueCar Trade; the company expects that number to climb to 1,000 by yearend, Skutta said.

For lenders, look-to-book ratios should be 1.5 times higher among dealers who use the trade-in tool compared with those who don’t, Skutta said.

“This means more efficient and increased transactions for the dealer, which is volume for the lender and the captive,” he added. More than half of the consumers who use the trade-in product will sell or trade in their vehicle, the company noted. “According to J.D. Power we touch just under 50% of all new car shoppers in America, for our dealers that audience is significant,” Skutta said.



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Electric Vehicle OEM Offers Drive Motors’ Digital Financing


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Electric vehicle startup Karma Automotive has synced up with digital sales platform Drive Motors to power its online checkout option for consumers. Drive Motors, which counts Ally Financial Inc. as a preferred lender on its platform, enables consumers to get fully approved for loans in less than a minute, Chief Executive Aaron Krane told Auto Finance News.

Additionally, consumers can browse Karma’s inventory while valuing their trade-ins from home. However, consumers may still need to walk into the dealership at least once, in states that require a wet signature. To that end, Drive Motors is confident that the partnership will help bring a consistent consumer experience for Karma by focusing on one third-party solution to test.

“Newer brands can move faster,” Krane said. “Certain established OEMs likely [are] not going to be able to choose a single consistent online buying solution for their dealerships, so they will have to certify multiple, whereas a new OEM like Karma can create a consistent experience by focusing on one solution.” Drive Motors declined to say which larger OEM partners are still in the testing process.

For now, Irvine, Calif.-based Karma anticipates that 10% of its vehicles will be sold through the online platform, Erhen Bragg, store director for Karma Orange County, told AFN. The service is currently available at Karma’s Orange County dealership, and the OEM is launching dealerships in San Diego, San Francisco, and West Los Angeles that will come equipped with the Drive Motors solution starting in 2019.

After the viability of the platform is tested at these stores, the solution would be introduced to Karma’s 15 other dealerships across the U.S. and Canada, Bragg said. A 2018 Karma Revero costs $130,000.



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Santander Settles CFPB Allegations of Loan, GAP Misrepresentation


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Santander Consumer USA has finalized an agreement with the Consumer Financial Protection Bureau to pay a $2.5 million fine and more than $9 million in restitution, according to a consent order filed by the bureau on Tuesday.

Nearly a year after speculation surfaced of a possible consent order, Santander is finally settling November 2017 allegations by the bureau that it misled consumers about the cost of loan extensions and the coverage of ancillary insurance products.

Santander agreed to settle without admitting or denying the CFPB’s claims.

In addition to the fine and restitution, Santander is required to develop a new compliance plan and a risk-management program related to auto loan origination and servicing, the bureau notes. The lender must also incorporate new training materials into the current compliance training for employees.

Details of the consent order reveal how the subprime lender was allowing borrowers to make interest-only monthly payments without explaining that this type of payment increases the total cost of the loan. The lender contacted consumers who had fallen behind on payments and offered to extend their loan terms. Santander told consumers that the extensions would move monthly payments to the end of their loans but failed to explain to consumers how or when the accumulated interested would be repaid.

Since July 2011, Santander misrepresented consumers into enrolling in more than 2.3 million extensions, the bureau claims.

The CFPB also states that Santander failed to accurately explain to consumers its S-Guard guaranteed asset protection (GAP) policies. The lender allegedly neglected to inform consumers that GAP does not cover the costs of replacing a car that’s destroyed in an accident if the loan was worth more than 125% of the value of the vehicle at the time of purchase. Despite the LTV limitations, Santander sold S-Guard GAP to 44,180 consumers with LTVs higher than 125%.

Santander Consumer USA has $42.8 billion in assets. Earlier this year, it resolved regulatory compliance issues initiated by the Justice Department and the Federal Reserve Bank of Boston.



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Future of Renault-Nissan-Mitsubishi Alliance Uncertain Amid CEO Arrest


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RenaultNissanMitsubishi Alliance is likely to undergo reconfiguration regarding which brand holds the power, following the arrest of Nissan Chief Executive Carlos Ghosn on Monday. However, the impact on the financing side should be minimal, analysts told Auto Finance News.

“Most consumers pay little attention to these palace-intrigue stories,” Michelle Krebs, an executive analyst at Autotrader, told AFN. “The biggest question is what happens to the [alliance]. Ghosn was the glue that held the alliance together, despite tension among the parties.”

Ghosn’s leadership of the alliance — which began in 1999 as a means of rescuing Nissan from near-bankruptcy — deserves credit for “being the brainchild” behind a complex yet dynamic alliance that has proven beneficial to all OEMs involved, Anil Goyal, executive vice president of operations for Black Book, told AFN.

“Each brand has seen the value of the alliance and having that power in terms of sourcing and infrastructure and capabilities,” Goyal said. “It would be harder for the brands to decide to do it all alone and not together.”

The three carmakers share ownership. Renault holds a 43.5% stake in Nissan, while Nissan owns 15% of Renault. Mitsubishi joined in 2016 after Nissan purchased 34% of its stock.

Black Book anticipates the reconfiguration of the alliance as a positive for Nissan and its captive finance arm Nissan Motor Acceptance Corp., as it has become a major player in the industry and within the alliance, Goyal said.

“The alliance will be changed and reconfigured based on who holds the key to the power — I think that will be a positive for Nissan,” Goyal said. “It’s a matter of figuring out what’s the benefit for the alliance and keep it simple and less complicated so the [OEMs] can still take advantage of working together.”

NMAC and Mitsubishi Motors North America have previously expressed to AFN how the alliance drives profitability and opportunity.

“[The alliance] enables the expansion of our support responsibilities in North America for sales finance,” President Kevin Cullum told AFN in September. Overall, the alliance provides NMAC the opportunity utilize Renault and Mitsubishi to target specific markets where the separate brands’ presence is strong.

Earlier this year, the alliance reported a 14% increase in annualized “synergies” — the result of cost savings, incremental revenues, and cost avoidance. These synergies grew to $6.7 billion in 2017, compared with $5.8 billion in 2016. Mitsubishi Motors North America, for one, has benefited from its first year in the alliance, which drove total sales of more than 10.6 million vehicles.

The global impact of Ghosn’s arrest is yet to be revealed, but the news reportedly dropped shares of Renault — falling as much as 15% in Paris — while Nissan’s global depository receipts decreased more than 11%, according to Bloomberg.

Ghosn was arrested by Japanese authorities for alleged financial misconduct. He has not been charged, according to reports, and he has not issued a statement. With investigations still ongoing, Nissan is organizing a board meeting on Thursday to discuss the removal of Ghosn from the position of chairman and representative director, Nissan Chief Executive Hiroto Saikawa said during a news conference at Nissan headquarters in Yokohama on Monday.



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Dealers Seek Quicker Response Time, More Data From Lenders, New Study Finds


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Sales reps and credit analysts are knowledgeable about their lenders’ product offerings but tend to fall short when it comes to accessibility and information-sharing, according to the Auto Finance Performance: Dealer Insights Report released today.

The report, published by Auto Finance News’ parent company Royal Media, analyzes 6,200 dealer evaluations to identify the core traits that spur dealers to choose one lender over another. It also tracks analyst callback time and maps the frequency that dealer issues are resolved on the first call.

Among various institution types, captives scored highest for accessibility and ability to keep dealers informed of product enhancements and dealership performance. “Their deficiency lies in the willingness to get deals done,” according to the report.

On average, credit analysts returned calls in 65 minutes. Analysts usually called back about prime loan applications within 56 minutes, and about nonprime or subprime apps within 75 minutes, according to the report.

By institution type, captives call back fastest ­— in 62 minutes.

Credit unions, meanwhile, are most adept at resolving issues on the first call, according to the report.

Broadly, dealers seek sales reps that have their best interest at heart and will bend over backward to get deals done. “I would choose the hard-working rep over the bank with the lowest rates that has no interest in building relationships with their dealers,” said one dealer quoted in the report.

Sought-after personality traits among reps and analysts include honesty, professionalism, sincerity, intuitiveness, and an upbeat attitude.

The report analyzes dealer data based on institution type – bank, captive, credit union, and independent finance company – as well as by dealership respondent – franchise versus independent. It also includes state-by-state data and comparisons between prime and subprime lenders.

“At a time when vehicle sales are starting to decline, better-rated lender traits will become increasingly critical to drive volume,” the report said. “These traits translate to a strong lender book-to-look ratio.”

To obtain a copy of the full report click here.



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Chase Auto, USAA, Bank of America on Direct Lending and Improving Dealer Relations [VIDEO]


Direct lenders are coming up with innovative strategies to provide customers with a better experience while maintaining a stronger working relationship with dealers. Lenders from well-established auto financing institutions participated in a panel discussion at the 18th Annual Auto Finance Summit to discuss those issues, as well as how to keep their customers from being “flipped.”

“The potential of the customer being flipped at the dealer is why we have to bring the dealer into the equation, this is only one component of the customer journey,” Peter Gasparro, head of strategy and business development at Chase Auto, said during the discussion. “We’ve got to bring the dealer into the conversation and try to understand their economics as well and the fact that they’re a critical part of this customer journey.”

Each panelist admitted the potential of their customer being flipped isn’t something the lender has total control over, but that there were best practices to prevent it.

Renee Horne, vice president of consumer lending experiences at USAA Bank emphasized the need to educate consumers about their financing options.

“When the dealer says, ‘would you like to lower your monthly payment,’? The consumer already knows what their options are based on what we’ve already provided, and they’re not enticed just because they saw a new price point at a longer term,” Horne said.

“We try to educate our members upfront, so they know what they’re getting into,” she added.

Bank of America’s Senior Vice President of Retail Auto Products and Strategy, Kal Valakuzhy, echoed this strategy to keep the customer from being “flipped.”

“Today’s customer expects a lot from the lender in terms of providing that education, providing help in choosing the right car to fit their lifestyle and financial situation,” Valakuzhy said. “If you provide the best solution, the chances of them getting flipped at the dealership decreases.”

Check out the exclusive interview below, which is part of a special video series sponsored by White Clarke Group.

 

 

 

 



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Chase Auto, USAA, Bank of America on Direct Lending and Improving Dealer Relations [VIDEO]


Direct lenders are coming up with innovative strategies to provide customers with a better experience while maintaining a stronger working relationship with dealers. Lenders from well-established auto financing institutions participated in a panel discussion at the 18th Annual Auto Finance Summit to discuss those issues, as well as how to keep their customers from being “flipped.”

“The potential of the customer being flipped at the dealer is why we have to bring the dealer into the equation, this is only one component of the customer journey,” Peter Gasparro, head of strategy and business development at Chase Auto, said during the discussion. “We’ve got to bring the dealer into the conversation and try to understand their economics as well and the fact that they’re a critical part of this customer journey.”

Each panelist admitted the potential of their customer being flipped isn’t something the lender has total control over, but that there were best practices to prevent it.

Renee Horne, vice president of consumer lending experiences at USAA Bank emphasized the need to educate consumers about their financing options.

“When the dealer says, ‘would you like to lower your monthly payment,’? The consumer already knows what their options are based on what we’ve already provided, and they’re not enticed just because they saw a new price point at a longer term,” Horne said.

“We try to educate our members upfront, so they know what they’re getting into,” she added.

Bank of America’s Senior Vice President of Retail Auto Products and Strategy, Kal Valakuzhy, echoed this strategy to keep the customer from being “flipped.”

“Today’s customer expects a lot from the lender in terms of providing that education, providing help in choosing the right car to fit their lifestyle and financial situation,” Valakuzhy said. “If you provide the best solution, the chances of them getting flipped at the dealership decreases.”

Check out the exclusive interview below, which is part of a special video series sponsored by White Clarke Group.

 

 

 

 



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KAR Auction Bolsters Tech Offerings With Acquisition of Clearplan


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KAR Auction Services is tapping into technology to better its operations with its acquisition this week of Clearplan.

Clearplan, a Reno, Nev.-based digital platform, serves as a central hub for repossession workflow management, logistics, and reporting. The digital platform connects thousands of recovery agents and lenders while enabling real-time communication to more efficiently list, log, and track vehicle recovery activity.

Clearplan will now become a part of KAR’s digital services group of companies. “By integrating Clearplan with our existing capabilities, we will be able to offer smarter, faster, and more convenient solutions that serve the entire asset-recovery ecosystem,” said Peter Kelly, KAR’s president of digital services.

The acquisition brings new mobile technology and real-time data analytics to KAR’s portfolio of “software as a service” capability, including its Recovery Database Network, the press release notes. Subsidiary RDN provides specialized software and data solutions to customers across the repossession and disposition value chain.

Carmel, Ind.-based KAR is no stranger to acquisitions. The company has made other investments with a particular focus on data capabilities to bolster its position in the wholesale market. Last year, KAR acquired CarCo Technologies Inc. for $43 million in a move to add innovative data analytics to its operations.

“We’re focused on the wholesale market, the B2B space,” Chief Executive Jim Hallett said during the company’s third-quarter earnings call. “As I think about the future, I think about a global company that is providing all of these services and deploying all these assets that we have around the world.”

Back in February, KAR acquired mobility and fleet management software company STRATIM in a bid to get a “seat at the table” as mobility is in the early stages of evolving, Hallett said. 

“We’re really well-positioned to serve our customers and stay focused and stay disciplined on our space and not just chase every shiny object that might appear,” he said.

Last quarter, KAR reported an 11% increase in revenue, to $933.5 million, and a 23% increase in net income, to $77.5 million.



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