Tag Archive | "Auto Finance"

Credit Tightening at Wells Fargo to Continue Into 2018


SAN FRANCISCO — In 2009, the year before Wachovia Dealer Services officially became Wells Fargo Dealer Services, the finance source was listed as the No. 1 subprime auto lender by market share. It also held the largest share in the used-vehicle financing segment. Times have changed.

During the bank’s second-quarter earnings call on July 14, Wells Fargo executives reported auto originations of $4.5 billion. That’s down $2.5 billion from the first quarter and $4 billion from the year-ago quarter. The reason: tighter underwriting standards.

“As we’ve discussed previously, we’ve tightened credit underwriting standards in auto, which has our origination volume down 17% from the first quarter (45% from a year ago),” said CFO John Shrewsberry, noting that the average FICO for auto loans originated during the period rose from 696 in the year-ago period to 719. “As we focus on improving execution and efficiency through increased standardization and centralization, we expect auto loans to continue to decline in the second half of this year.”

Reflecting this tightening was an $82 million decline in consumer credit losses, with net charge-offs down $41 million from the previous quarter. The improvement in overall consumer credit allowed the bank to releases $100 million in reserves for credit losses, officials said.

Additionally, the bank’s total outstanding loan balance declined 4% from the first quarter and 6% from a year ago to $58 billion. Loans 30 days past due increased by $225 million from a year ago on weaker market conditions.

As for the bank’s commercial portfolio, loans increased 7% from a year ago to $11.5 billion on higher dealer floorplan utilization.

In 2015, Wells Fargo reported record originations of $31 billion. A year later, the bank originated more loans than any other finance source, according to Experian Automotive. In the first quarter of this year, however, Wells Fargo Dealer Services fell to No. 4 on Experian’s market share list, with originations falling 29% on a year-over-year basis.

Several members of the executive team that led the transition from Wachovia Dealer Services to Wells Fargo Dealer Services in March 2010 have also left the company. Tom Wolfe, who headed up the business during its transition to Wells Fargo Dealer Services as president, was named vice president of the bank’s consumer credit solutions in 2012 before retiring in October 2014.

Wolfe’s successor as head of Wells Fargo Dealer Services, Dawn Martin Harp, retired this past April, and Bill Katafias, another Wachovia holdover who served as Wells Fargo Dealer Services’ national product retail credit executive, left the company this past February. In May, he joined Irvine, Calif.-based CRB Auto, a division of Mechanics Bank.

Wells Fargo’s dealer services business unit is now led by 20-year company veteran Laura Schupbach, who was appointed to the post this past March. She officially assumed her new role in April. Shrewsberry mentioned Schupbach’s hiring during the bank’s recent earnings call, noting that consumer loan growth will continue to be impacted by the actions “we’re taking in our auto portfolio and expected runoff of legacy junior lien mortgage loans.”

Shrewsberry added that the bank is making “modest changes” to generate loan originations for its consumer loan segment, including offering interest-only jumbo mortgage loans to high-quality borrowers and testing credit card offerings through the company’s digital channels.

When asked during last Friday’s earnings call how far the bank’s tightening on auto loans will go, Wells Fargo President and CEO Timothy Sloan responded, in part, “My bet is it will probably stabilize sometime in the first half of next year. I think during that entire time, it’s reasonable to assume that’s the quality of the underlying customer … measured by FICO score will continue to improve.

“I don’t know if it will continue to improve at the levels we’ve seen, but it will continue to be very strong,” he added. “And then my guess is that’s where the business will stabilize sometime in the first half of next year.”

Posted in Auto Industry NewsComments Off on Credit Tightening at Wells Fargo to Continue Into 2018

Innovative Lending Releases Loan Management Tool for F&I Offices


CHICAGO — Innovative Lending Solutions LLC announced the release of Stip Trac, an automotive loan management system designed to help dealers track cash flow, collecting necessary loan documents, or stips, and keeping an open communication line with car buyers before and after their purchase.

Stip Trac features a dashboard that allows users to track cash owed by a bank, set “contact-in-transit” limits, and track money in transit by salesman. It also provides status updates on any deal in transit, held at dealership, funded, etc. Users can also look up the age of a deal and missing stips, as well as add internal notes that can be viewed by all parties involved with the loan.

Stip Trac also allows dealers to add additional stips to a loan at any time, push welcome calls to the bank, and gain real references and referrals from customers. It also provides users with a “contact list” on their cell phone, and the ability to approve or deny stips as they are received.

The new tool also features a custom messaging so users can send an urgent message to the car buyer. It also offers automatic push notifications and a dealer-branded app that allow users to monitor a loan’s progress on their smartphones.

For the consumer, Stip Trac helps protect them from identity theft. It can also eliminate additional trips to the dealership to drop off loan-related documents, speeding up the finance process at the dealership.

“Stip Trac is a needed tool to improve the automotive loan process for car dealerships and consumers. Using Stip Trac removes a lot of the stress that today’s finance managers are facing today,” said Ed Maisonneuve, president and CEO of Innovative Lending Solutions LLC. “We truly built this so the delivery process is a smooth one. As a finance manager, I can’t tell you how many times a deal came into my office with missing documents, bad references, missing signatures. StipTrac 100% eliminates that.”

For more, visit www.StipTrac.com.

Posted in Auto Industry NewsComments Off on Innovative Lending Releases Loan Management Tool for F&I Offices

VW Credit Invests in AutoGravity


HERNDON, Va. — VW Credit Inc. (VCI) today announced it is making an equity investment in automotive fintech firm AutoGravity, pending customary regulatory approvals. According to company officials, the strategic investment supports the captive’s goal to digitize the customer financing process.

The announcement means finance options from Volkswagen Credit are now available to the more than 400,000 consumers who have downloaded the AutoGravity car-shopping and financing mobile app. Additionally, the captive has launched the Volkswagen Credit smartphone app, powered by proprietary AutoGravity technology and available for iOS and Android.

“Customers are becoming more demanding of mobile technology and the world of auto financing is no exception,” said VW Credit President and CEO Horst Meima. “We are ready to become a leader in shaping this part of the industry and believe that AutoGravity can help get us there.”

Through investment and partnership, according to officials, VW Credit has positioned itself to realize the full potential of AutoGravity’s technology. Volkswagen dealers benefit from a new source of potential car buyers.

Based in Irvine, Calif., AutoGravity, which appeared on the cover of F&I and Showroom’s January 2017 issue, offers car buyers across the U.S. the ability to obtain up to four personalized financing offers on the vehicle of their choice. Designed with state-of-the-art security, AutoGravity protects consumers’ information with advanced bank-level encryption and proprietary data security technologies, ensuring sensitive information is processed securely.

“Mobile technology is a game changer for consumers, dealers and lenders. We have pioneered a digital experience that saves time and improves satisfaction for all parties through a device we are intimately familiar with — the smartphone.” said Andy Hinrichs, CEO at AutoGravity. “AutoGravity has experienced substantial growth since our first app hit the marketplace in the summer of 2016. This investment will help us accelerate in the face of rapidly growing consumer and industry demand.”

Posted in Auto Industry NewsComments Off on VW Credit Invests in AutoGravity

NMAC President Named Infiniti Executive


NASHVILLE, Tenn. ─ Mark Kaczynski is leaving his post as president of Nissan Motor Acceptance Corp. to become vice president of administration and finance for Nissan Motor Co.’s luxury brand Infiniti, the automaker announced on Thursday.

Replacing Kaczynski as president of Nissan’s captive finance company is Kevin Cullum, who was promoted from his general manager post at Nissan Canada Finance. Both leadership changes are set to take effect on Aug. 1.

The automaker also announced that, effective July 1, Alain Ballu, current director of international projects and partnerships for RCI Bank, will replace Cullum as general manager of Nissan Canada Finance.

Kaczynski, who will be based in Hong Kong and report to Infiniti Motor Co. President Roland Krueger, was named president of NMAC in December 2011. He has also served as a board member for Nissan Global Reinsurance as well as Alliance Inspection Management since 2011. He originally joined Nissan in 2007 as director of marketing and sales.

Cullum will report to Rakesh Kochhar, senior vice president of finance and global sales finance business unit, and will be based in Franklin, Tenn.

Posted in Auto Industry NewsComments Off on NMAC President Named Infiniti Executive

Pew: CFPB Small-Dollar Rule ‘Would Not Adequately Protect Borrowers’


WASHINGTON, D.C. — The Consumer Financial Protection Bureau’s proposed small-dollar lending rule would neither not adequately protect borrowers, nor address the risks created by the shift toward installment credit in the payday and auto title lending market, a new analysis concludes.

Conducted by Pew Charitable Trusts, the analysis outlines the reasons for the shift to installment lending, highlights the riskiest practices, and identifies actions the bureau can other policymakers can take to counter these harms. It also identifies four primary loan characteristics that harm consumers, including unaffordable payments, front-loaded fees, excessive durations, and unnecessary high prices.

“The CFPB proposed rule would require most small loans to be repayable in installments, which would represent a significant improvement, but that change alone is not enough to make these loans safe,” the nonprofit organization stated. “In 13 of the 39 states where they operate, payday and auto title lenders issue only high-cost, single-payment loans, but in the other 26, they are already making installment loans with annual percentage rates of 200% to 600%.

“These high-cost installment loans would still be permitted under the CFPB standards.”

The analysis identified four primary loan characteristics that harm consumers. They include unaffordable payments, front-loaded fees, excessive durations, and unnecessary high prices.

Pew’s brief, “From Payday to Small Installment Loans: Risks, Opportunities, and Policy Proposals for Successful Markets,” shows that unaffordable payments can lead to the same types of problems as convention payday loans, including frequent re-borrowing, heave use of overdrafts, and the need for a cash infusion to retire debt — issues the CFPB hoped to address when it proposed its rule this past June.

The brief also shows that large upfront origination fees “effectively penalize borrowers who repay early or refinance, while unreasonably long durations can double or triple borrowers’ costs.”

“Because payday and auto title lenders typically compete on location, customer service, and speed rather than on price, costs for these products, like conventional payday and auto title loans, are unnecessarily high, such as more than $1,000 in fees for a $500 loan,” the brief states, in part.

The brief also lists the following policy recommendations it says will address the four main challenges posed by installment loans:

  • Establish clear ability-to-repay standards, limiting loan payment to an affordable percentage of a borrower’s periodic income.
  • Allow only interest charges or monthly fees on the loan, and no other fees.
  • Require loan to have reasonable repayment durations.
  • Enact price limit and enable lower-cost providers, including banks and credit unions, to enter the small-dollar loan market.

“The payday loan market is rapidly shifting away from lump-sum lending toward installments, but 400% APR payday installment loans can be harmful, too,” said Nick Bourke, who directs Pew’s small-dollar loans project. “To protect consumers, the CFPB should add to clear product safety standards to its rule, such as limiting installment payments to 5% of a borrower’s paycheck. This safeguard would make exiting loans more affordable and enable banks to offer comparable small credit at prices six times lower than payday lenders, saving millions of borrowers billions of dollars annually.”

The CFPB’s notice of proposed rulemaking for small-dollar loans is open for public comment until Oct. 7. For more on the bureau’s proposal, click here.

Posted in Auto Industry NewsComments Off on Pew: CFPB Small-Dollar Rule ‘Would Not Adequately Protect Borrowers’

J.D. Power Appoints New Senior Director of Auto Finance


DETROIT — J.D. Power has appointed Jim Houston as senior director of its auto finance practice. In his new role, Houston will use his 30-year experience in auto finance to help guide the industry through a potentially volatile period of new-vehicle sales and declining used-car values, the company said.

“I’m very excited to be joining J.D. Power to lead the auto finance practice, especially at this critical time for the automotive market and lenders,” Houston said. “The combination of new-vehicle sales tapering off and the growing volume of off-lease vehicles driving down used-car values creates some potential business concerns for auto lenders. It’s not a doom-and-gloom scenario, but it does require banks and captive lenders to remain diligent in order to stay competitive.”

Houston most recently served as the head of major account strategy and business development at TD Auto Finance. He’s he’s also held leadership positions at both captive companies and banks.

Posted in Auto Industry NewsComments Off on J.D. Power Appoints New Senior Director of Auto Finance

Page 2 of 612345...Last »