Who's Who Among Special Finance Companies (2016) Part 2

Who’s Who Among Special Finance

Companies

DEALERSTRONG

Greg Goebel, CEO

What Companies Are Buying Which Customers?

Session Overview• Annual review of which companies dealers are using most

often with credit tiers – significantly different in last 2Q.• Recap of each credit tier

• Likely different in every dealership, even within same organization• Customer/deal characteristics of each “national” credit tier• Breakdown of where the business falls nationally

• Averages vs. Benchmarks• Source of our data• Recap of the finance companies performance in each tier

Data Sampling• Cooperative effort - DealerStrong and ProMax Unlimited• Merged transactional deal data beginning May 2014. • Nearly 2.25M transactions from over 800 dealers who report

sales data tied to credit scores. • Data was scrubbed many times to validate each transaction.• Averages and benchmark deal characteristics for each credit

tier developed (including near-prime and prime).• Identify the most frequently and profitably financed vehicles.

Defining Greg Goebel’s National Credit Tiers

• Prime 681+• Near Prime 680 - 621• Tier 1 620 - 576• Tier 2 575 – 521• Tier 3 520 - 476 • Tier 4 475 - 100• Tier Zero 0

Special Finance

Relationship of Sales Among Special Finance Tiers

Month

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

SF Tier 1 SF Tier 2 SF Tier 3 SF Tier 4 Tier Zero

Prime 681+ Credit Scores

• Most creditworthy customers• Credit score of 681 and above• Lowest interest rates. Very extended terms• New vehicle buyers – average 755 credit score

• New vehicle gross profits exclude $915 in dealer incentives.

Near Prime 621 – 680 Credit Scores

• Some finance companies say they “act like prime buyers, except when it comes time to pay.”• Decent to good credit. • High debt to income ratios.• Highest average Total Deal Gross Profits

• New car vehicle gross profit excludes $915 average dealer incentive.

Vehicle Type

% of All Deals

Avg Score

Avg Sales Price Avg Miles

Amount Financed

Total Down Pmnt Pmnt

Avg. Term

Veh. Gross Profit

Total F&I Gross Pft

BchmarkDeal Profit

New 17.2% 653 $28,318 112 $29,426 $ 2,098 $ 479 66 $ 1,303 $ 2,167 $ 3,470 Used 20.5% 651 $17,427 57,520 $18,834 $ 1,195 $ 358 68 $ 2,480 $ 1,660 $ 4,140

SF Tier 1: 620 – 576 Credit Scores• Cream of the ‘crap’.• Deeper credit file.• Good residence and job time. Fees: $0 - $200• Good income. Req. Cash Down: $0• No major derogatory credit.


Vehicle Type

% of All Deals

Avg Score

Avg Sales Price

Avg Miles Amt Fin

Down Pmt

Average Payment

Avg. Term

Veh. Gross Profit

F&IGross Pft

BchmarkDeal

Profit

New 7.9% 600 $25,882 150 $27,112 $ 2,086 $ 500 69 $ 1,233 $ 2,652 $ 3,085

Used 13.5% 598 $16,177 57,277 $17,229 $ 1,187 $ 381 67 $ 2,298 $ 1,407 $ 3,704

SF Tier 2: 575 – 526 Credit Scores

• Traditional subprime buyer.• Stable employment & income. Fees: $95 - $400• Higher loan-to-value ratio. Req. Cash Down: $0 - $500• Worse payment-to-income ratio.• Decent car credit. Stable in area & at job.


Vehicle Type

% of All Deals

Avg Score

Avg Sales Price

Avg Miles Amt Fin

Down Pmt

Average Payment

Avg. Term

Veh. Gross Profit

F&IGross Pft

BchmarkDeal

Profit

New 5.5% 552 $24,210 180 $24,806 $ 2,681 $ 452 69 $ 1,098 $ 1,795 $ 2,893

Used 12.8% 550 $15,689 52,779 $16,772 $ 1,292 $ 381 66 $ 2,193 $ 1,171 $ 3,364

SF Tier 2 LeadersTier 2

% of Tier

Avg of CB

Sale Price Veh. GP F&I GP Total GP Avg Miles Term Paym

Santander Auto Finance 12.4% 551 16,488 659 1,288 1,947

41,004 70 424

Capital One 11.3% 552 16,943 903 1,422 2,325

38,848 70 407

Ally Financial 10.8% 553 19,701 1,213 1,938 3,151

32,972 70 417

GMF/Americredit 9.4% 552 20,261 906 1,084 1,989

27,920 69 411Regional Acceptance 7.5% 549 16,601 1,155 916 2,070

31,359 69 445

Wells Fargo Dealer Services 7.3% 550 17,833 1,521 1,214 2,735

53,172 66 368

Credit Unions 6.2% 555 15,265 1,375 1,221 2,596

62,596 64 346

CPS 5.1% 547 15,845 1,497 751 2,248

47,548 67 406

Credit Acceptance 4.9% 549 10,989 1,407 381 1,787

94,248 55 347

SF Tier 3 525 – 476 Credit Scores• Tier where you earn your keep.• Shorter job time, gaps. Verifiable but lower income.• Fees: $500 - $1000 Required cash down: $1000+• Some good credit – more derog. Likely prior repo or

foreclosure. LTVs 90% - 105% P-T-I 12% - 15%


Vehicle Type% of All Deals

Avg Score

Avg Sales Price Avg Miles

Amount Financed

Total Down Pmnt Pmnt

Avg. Term

Veh. Gross Profit

Total F&I Gross Pft

BchmarkDeal Profit

New 1.6% 502 $23,563 86 $23,836 $ 2,317 $ 472 71 $ 1,174 $ 1,434 $ 2,608 Used 5.3% 501 $14,622 62,725 $15,345 $ 934 $ 393 64 $ 2,157 $ 1,037 $ 3,194

SF Tier 3 LeadersTier 2

% of Tier

Avg of CB

Sale Price

Veh. GP

F&I GP

Total GP

Avg Miles Term Paym


43,371 69 418

CPS 10.4% 498 16,681 1,479 749 2,228

43,649 67 422

Regional Acceptance 10.0% 501 17,037 1,111 851 1,962

33,339 68 453

Capital One 8.2% 502 17,707 891 1,196 2,087

33,913 69 424

Wells Fargo 7.5% 505 15,556 1,425 889 2,314

59,272 64 349

GMF/Americredit 7.3% 503 20,912 1,209 1,009 2,219

25,750 70 433

Credit Union 6.8% 502 14,293 1,785 703 2,488

70,513 59 314


95,629 54 371

Prestige Financial 6.1% 500 15,815 1,726 958 2,684

42,647 69 426

Ally Financial 5.1% 503 17,968 1,238 1,939 3,177

35,031 69 408

SF Tier 4: 475 – 300 Credit Scores• BIG difference New vs Used• New: huge payments Fees: $1500 - $3000 • Used: BHPH “on steroids” (often shared risk)• High D-T-I and P-T-I ratios. Req. Cash Down: $1500 - $3000• Short job time, gaps &

hard to prove income. *Many exceptions (DL, stubs, repos)


Vehicle Type

% of All Deals

Avg Score

Avg Sales Price

Avg Miles Amt Fin

Down Pmt

Average Payment

Avg. Term

Veh. Gross Profit

F&IGross Pft

BchmarkDeal

Profit

New 0.4% 458 $24,321 105 $23,258 $ 3,934 $ 504 70 $ 1,048 $ 994 $ 2,042

Used 2.2% 453 $14,266 65,105 $14,917 $ 1,221 $ 387 62 $ 2,030 $ 933 $ 2,962

SF Tier 4 Leaders

Tier 2% of Tier

Avg of CB Sale Price Veh. GP F&I GP

Total GP

Avg Miles Term Paym

CPS 13.3% 453 16,915 1,449 886 2,336

44,701 68 430


78,595 57 396


45,142 69 459

Prestige Financial 11.5% 452 15,536 1,898 973 2,871

41,284 68 414

Regional Acceptance 10.0% 452 16,225 1,212 1,208 2,420

33,943 67 452

Credit Union 5.5% 462 13,049 1,459 686 2,144

80,766 56 324

Gateway Financial 4.8% 453 10,040 801 119 919

109,731 57 307

Special Finance Zero Credit Scores

• Can be credit “ghost” or credit criminal

• Affordability (PTI) w/shorter Fees: 10% - $2500term is key. Req. Cash Down: 10% - $3000

• Significant equity• In some states, non-documented aliens. Tier grew by 20%+ in 2015!


Vehicle Type

% of All Deals

Avg Score

Avg Sales Price

Avg Miles Amt Fin

Down Pmt

Average Payment

Avg. Term

Veh. Gross Profit

F&IGross Pft

BchmarkDeal

Profit

New 2.9% 0 $22,917 41 $21,820 $ 4,485 $ 451 67 $ 946 $ 1,565 $ 2,511

Used 8.7% 0 $13,701 64,840 $14,213 $ 1,584 $ 338 64 $ 2,182 $ 1,028 $ 3,210

SF Tier Zero Leaders

No Score% of Tier

Avg. of CB SalePrice Veh. GP F&I GP Total GP

Avg Miles Term Paym


38,310 70 423

Credit Union 16.6% 0 14,967 1,325 1,281 2,606

63,258 63 307

Wells Fargo Dealer Services 8.4% 0 14,908 1,384 942 2,325

57,513 65 312


93,199 56 371

Capital One 7.2% 0 15,333 1,246 1,418 2,664

41,600 68 367

Ally Financial 5.8% 0 16,857 1,688 1,661 3,349

43,654 67 329

Regional Acceptance 5.6% 0 15,211 1,043 897 1,941

35,886 67 416

Open Chapter 7 Bankruptcy

CompanyPct of Niche Sale Price

Avg. Mileage

Total Down FE Pft.

Total F&I Pft

Total Pft. Term Pmnt

CPS 49.7% $17,541 49,084 $1,241 $2,836 $ 818 $3,654 67 $449

Prestige Financial 30.3% $16,605 40,957 $ 674 $2,492 $1,100 $3,592 69 $437

Tidewater 7.1% $17,790 34,026 $ 555 $2,301 $1,167 $3,467 69 $451

United Auto Credit 5.4% $11,379 115,876 $1,190 $3,959 $ 115 $4,075 45 $394American Credit

Acceptance 2.4% $13,589 96,548 $1,791 $2,508 $ 437 $2,946 53 $389

Thank You.

For More Information:

Visit http://www.dealerstrong.com/ Call our office @ 877-811-8107

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Who's Who Among Special Finance Companies (2016) Part 2

Automotive

Transcript of Who's Who Among Special Finance Companies (2016) Part 2