Tag Archive | "credit"

Easycare Appoints Rob Mirra as National Director of New Business

Norcross, Ga. – EasyCare, the leading independent provider of automotive ownership benefits and dealer services that help dealers create more passionate employees and customers, has appointed Rob Mirra as National Director of New Business Opportunities. Mr. Mirra will be leading the building of new EasyCare relationships with dealerships across the nation who are interested in creating a better experience for their employees and customers, and driving more opportunity for success in every area of the dealership that touches the customer.

“Rob has a unique way about him that truly engages people. The relationships he builds last for years and we are excited to bring his special personality and talents to the EasyCare family. People engage with Rob because of his direct and honest approach, and his intense desire to help others succeed. Rob’s a perfect fit for our culture here at EasyCare” said Larry Dorfman, CEO of EasyCare.

Mirra brings with him over ten years of automotive experience. Having worked through the ranks as a sales person, F&I Manager, General Manager and owner of dealerships, he’s gained comprehensive insight into the industry on a grand scale. Prior to joining EasyCare, he was Executive Manager and Partner at Henderson Hyundai, and before that National Sales Director at Hyundai Capital America where he was primarily responsible for insurance, commercial credit and finance.

Mirra has served the public for many years as a veteran of the US Army and as a police officer for the Newport News Police Department.

“What I’m mostly excited about working at EasyCare is that we’re introducing a completely different approach to working with dealerships. Finance and insurance doesn’t start in the F&I office anymore. It starts at the first contact with the customer. Our business is more of a partnership and we help dealers engage their customers at every touch point. It’s a lot more personal,” said Mirra. “It’s important to continuously seek out new ways to fulfill the needs of our dealers and provide the most positive experience for their employees and their customers.”

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What Do You Mean, No Credit Insurance?

I recently bought a car and I decided to finance the car through the dealer because of the great rates that were available. The dealer was financing me through a Credit Union I’ve been a member of for years. After some negotiation with the F&I manager, (you know, deciding how much I’d let him make), I added GAP and a service contract to my loan. Then I told him to be sure to add Credit Life. It’s a no brainer for anyone over 50 years old. Credit Life is a good buy for older buyers because the premium isn’t inflated by age. It’s certainly the cheapest term insurance I can buy.

But I was shocked when the F&I manager said “I’m not allowed to sell credit insurance”. Now, since the dealer was financing me through my own Credit Union, I can just as well walk into my local branch and get the same rate the dealer gave me. I was just letting the dealer get a flat fee, make a little money on the deal, and save a trip to the Credit Union.

But since the dealer doesn’t sell Credit Life, if I wanted it, (and I did), I would have to refinance the loan directly with the same Credit Union. Of course, if I were a normal customer who went to the Credit Union, the dealer would lose the finance income, GAP, and almost surely the service contract.

Now, I understand that service contract sales are the main focus of most agents, and every dealer has the right to offer what they choose. And licensing can be an added chore. But not having a product available that many customers clearly will buy misses an additional profit opportunity.

Since the “big box” F&I product providers have stopped underwriting Credit Insurance, they focus mainly on service contracts. That’s where they make their money so that is where they focus their processes and training.

Are customers still buying Credit Insurance?

The short answer is yes, and some by fairly impressive numbers. Certainly, our monitoring of many of the country’s top performers shows some impressive penetrations of Credit Insurance sales.

But it can depend on who you ask and where you are. In some states, California, New York, and maybe a couple of other states, state regulations have made the product so expensive, cumbersome, or unprofitable for the dealers they don’t offer it. But in Texas, the Midwest, Northeast, and much of the West, it is still quite popular.

Isn’t Credit Insurance too expensive these days?

Not when you analyze the risk it covers. GAP, for instance covers the difference between the insurance company’s settlement and the payoff. And service contracts pay only for repairs. Credit insurance, however, has the potential to pay off the entire loan. And when you analyze the amount paid out in claims, Credit Insurance gets used.

The premiums charged for credit insurance are set by the states insurance departments. Their calculations are usually determined by loss ratios, in other words, how much premium is paid out in actual claims to consumers. They look at how much the insurance company pays out, allow reasonable fees and commissions, and set the price accordingly. One advantage of that process is that there’s no chance of discrimination or “disparate impact” when the state sets the premiums.

You might be surprised at how many claims get paid to people who find they really need the coverage. Here are a couple of actual comments from a claims survey conducted by a major Credit Insurance Company recently:

“My husband was diagnosed with Stage 4 lung cancer in Jan. and passed in Sept. this year. This insurance was very helpful”.

“After my disability I was able to keep my car and motorcycle. Thank you for this help. It took a lot of stress out”.

They get hundreds of those kinds of comments from customers.

Won’t that big payment bump affect the sales of other products?

Believe it or not, offering Credit Insurance with our Package Option™ process actually increases service contract sales. Our process capitalizes on the customer’s security driven responses and reluctance to eliminate more than one or two products when presented in the Package Option™ format. Many of them will drop the A&H, maybe the Life but keep everything else. Good deal. But a side benefit of this strategy is that you end up posting some pretty healthy Credit Insurance penetrations.

Another factor we have measured is that dealers who don’t offer Credit Insurance may not be replacing those products with other security driven products. A commonality among underperforming F&I departments is a reliance on finance reserve, service contracts, and maybe a little GAP as the total source of department income.

The charts below show the product vs. income numbers from a select group of dealers in one particular Dealer 20 Group study. These numbers do not include the very top or bottom performers, just the above average and below average performers in the middle.

Will today’s customer actually buy Credit Insurance?

The overwhelming evidence says they will, if you know how to present it. And the most immediate and catastrophic threats to most customer’s economic welfare are either the vehicle being totaled leaving an outstanding balance (GAP), a death of one or more of the buyers (Credit Life), or a long term disability and loss of income (Accident and Health Coverage). And they know that.

I could go on and on about why today’s customer will buy Credit Insurance, but the simple answer is that if dealers don’t present a product to a customer, they probably won’t buy it.  And that works pretty well for dealers who don’t offer enough security motivated products.

This was demonstrated in one of our surveys of new car buyers:

“Over 50% of buyers who did not purchase Credit Insurance, surveyed at 45 days after purchase, said it had not been offered. Nearly half of those said they would have purchased either life or A&H when informed of the approximate monthly cost”.

How do our dealers integrate Life and Disability into their presentation?

First, it has a lot to do with the strategy of our Package Option™ process. Now, I don’t want to oversimplify how our process works, but those of you who have attended our training know that we present all of the products in our packages and then allow the customer to control the process of modifying and building their packages. This is particularly effective when presenting “fear of loss” type products.

Our process reduces the payment by peeling off the Credit Insurance products first. The first to go is A&H followed by the Life. This approach would make it seem like we don’t want to sell Credit Insurance. However, what we are really doing is using Credit Insurance as a sacrificial lamb to give the best chance of hanging on to the other products. But our dealers also sell a lot of Credit Insurance as an added benefit.

Should you encourage dealers to present Credit Insurance?

In states where it makes sense, Credit Insurance can be a valuable addition to your dealers’ product line and a blessing to those customers who need it. Certainly, the Package Option™ method can help you do that. In many top F&I departments, Credit Insurance is still an integral part of an overall strategy that is producing those top results.

Make sure your dealers aren’t missing that opportunity. Making me refinance at the Credit Union, just to get Credit Life, doesn’t make a lot of sense.

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Consumer Complaints Hit 677,000, CFPB Reports

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) released a report Tuesday highlighting trends in consumer complaints through August 1, with credit reporting complaints seeing the sharpest increase compared to both the prior month and prior year.

The bureau has handled approximately 105,000 credit reporting complaints since it began accepting them in October 2012. Those complaints jumped 56% between June 2015 (4,289 complaints) and July 2015 (6,969 complaints). In analyzing the period of May through July 2015, complaints increased by 45% compared to the prior year.

Of those complaints,77% involved incorrect information on reports. Consumers frequently complained of debts already paid or debts not yet due showing up on their report, negatively affecting their credit scores. The CFPB said that consumers also had trouble accessing their reports as a result of rigorous online identity authentication questions.

The three companies that received the highest volumes of credit reporting complaints were Equifax, Experian and Transunion, which accounted for 97% of credit reporting complaints.

Overall, the bureau has handled 677,200 complaints nationally. In July, the most complained about financial product or service was debt collection, representing about 31% of complaints submitted. The second most-complained-about consumer product was credit reporting, accounting for approximately 6,696 complaints. The third most-complained-about financial product or service was mortgages, accounting for approximately 4,498 complaints. The CFPB did not list auto loans amount the 11 credit products that triggered complaints.

The bureau reported that in a year-to-year comparison, consumer loan complaints, which include pawn loans, title loans, and installment loans, showed the greatest percentage increase (61%) from the same time last year. They went from approximately 718 complaints to 1,154 complaints on average per month over a three-month time period. Bank account or services complaints showed the greatest percentage decrease over the same time period, going from a monthly average of 1,976 complaints in 2014 to 1,895 complaints in 2015 — a 4% decrease.

Hawaii, Maine, Georgia, and North Carolina experienced the greatest complaint volume increases from the same time last year, with Hawaii up 37%, Maine up 36%, and both Georgia and North Carolina up by 33%. South Dakota, New Mexico, and Alaska experienced the greatest complaint volume decrease from the same time last year, with South Dakota down 31%, New Mexico down 16%, and Arkansas down 11%.

“Whether a consumer is trying to get a mortgage, apply for a student loan, or buy a car, credit reports are fundamentally important in allowing people to access their financial goals,” said CFPB Director Richard Cordray in a press release. “As we see a rise in the number of consumers complaining about this issue, the Bureau will continue to work to ensure that credit reports are fair, accurate, and readily available to all consumers.”

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Equifax Refutes ‘Subprime Bubble’ in New Report

ATLANTA — Equifax Inc. has released its latest economic trends commentary, “Subprime Auto Loans: A Second Chance at Economic Opportunity,” which examines two groups of consumers with deep subprime credit scores over a three-year period: those who originated a subprime auto loan and those who did not.

Equifax found that over the three-year time period, those consumers with deep subprime credit scores that originated a subprime auto loan showed, in aggregate, a significant increase in their credit score. In fact, those consumers improved their credit score by a median of 52 points, which is a 62.5% improvement over the median score change of the group that did not take out a loan. Even more telling, those that took out a subprime auto loan were four times more likely than those who did not to have improved their score to a level above 640, moving them out of the subprime segment.

“The auto industry’s success wouldn’t be what it is today if it weren’t for the responsible, solid subprime loans made to the many Americans in need of a car to get to their jobs or take their children to school,” Chief Economist Amy Crews Cutts and Deputy Chief Economist Dennis Carlson said. “Lenders now have better tools, more data and enhanced technology available to them to make sounder and safer decisions. While we should all continue to remain vigilant, we can confidently say that subprime auto lending is currently performing well, it’s not growing as quickly as prime lending, and our data does not suggest that a bubble is forming.”

“I started my career sitting across the loan desk from thousands of nonprime families in need of a vehicle — each of them having a story about circumstances that resulted in their less than perfect credit score,” said Lou Loquasto, auto finance leader at Equifax. “It was rewarding to watch these customers diligently make the most of these second chances and see a high percentage graduate to a prime credit standing — empowering them to take full advantage of their newfound financial well-being.”

To read the full report, click here.

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Build Your Business Credit: 5 Key Reasons to Get Started

Building business credit is just as important as building and taking good care of one’s personal credit. In the business world, a company does not have a consumer FICO Score. Instead, it has business credit scores, ratings maintained and calculated by business credit reporting agencies, reported the SBA.

“Just as your personal credit has a big impact on your financial health, your business credit can help you get competitive business loan rates and terms from potential suppliers,” says Marc Kirshbaum, president of Experian’s Business Information Solutions group.

Unfortunately, many small business owners don’t even know there is such a thing as a credit score for a business and therefore lose opportunities to improve their own, says Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp.

Many times, small business owners make the mistake of assuming that positive personal credit scores will be enough to obtain good business credit ratings. While lenders and suppliers may initially consider personal credit history, once a business pays its first invoice, it will begin building its own credit history.

Did you know that there is such a thing called a business credit report?

Similar to consumer credit reporting agencies, there are a few major business credit reporting agencies collecting information about businesses. Most notably: Dun & Bradstreet, Experian Business, and Equifax Small Business. Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp. says, “Today, it takes a very proactive approach to building a strong credit score for your business.”

Here are five reasons small business owners should start building business credit today:

Business Financing: Lenders and suppliers use business credit reports to assess the creditworthiness of a business. According to Creditera, in the first 6 months of 2013, Dun & Bradstreet had 45 million business credit report requests and Equifax Commercial had 35 million. If a company’s business credit ratings are high, lenders and suppliers will give favorable terms to purchase on credit. If a business does not have a business credit rating or report, a supplier may require you to pay cash on delivery or ask you to personally guarantee the business purchases.

Supplier Contracts: If a company wants to do business with government agencies or Fortune 500 companies, chances are they will review your business credit reports. For example, one of the steps required in order to register as a Federal Contractor is to obtain a Dun & Bradstreet D-U-N-S® Number. Government and large corporations review business credit scores and reports to make sure their suppliers are reliable and pay their invoices in a timely manner.

Business Separation: Business owners have the unique opportunity to build, maintain and obtain credit both individually and as a business owner. As a business applies for and receives credit, a business credit report will be established. This enables a complete separation between the personal credit reports of the business owner to the reports established by the company itself. In addition, having separate lines of business credit makes it easier to keep business expenses separate from your personal expenses.

Credit Protection: With favorable business credit ratings, a business can obtain financing from companies willing to grant credit without a personal credit check or guarantor. This allows a business to acquire products and services it needs on credit without putting the business owner’s personal credit at risk.

Business Partners: Business credit reports are frequently being pulled by potential business partners so they can find out about a company’s credit history and decide if the business is capable of being a sound business partner. Unlike personal credit reports, business credit reports are available to the public, and anyone – including potential lenders and suppliers – can view your company’s reports. This makes it imperative to also monitor your files on a regular basis.

According to the 2012 NSBA Small Business Access to Capital Study, 20% of small business loans are denied due to business credit. As a small business owner it is extremely beneficial to start the business credit building process so you can maximize your company’s funding potential.

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No Subprime Bubble in Sight, Equifax Says

ATLANTA — While year-to-date auto loan growth rates have slowed compared to last year, totals for new credit and the number of new loans originated for auto purchases are at all-time highs, according to Equifax’s latest National Consumer Credit Trends Report.

Through June, the total number of new loans originated was 12.5 million, an increase of 4.9% from same time a year ago. The total balance of new loans was $254.2 billion, an increase of 6.9% from same time a year ago. The total also represents nearly half of total new non-mortgage credit originated.

“Auto sales continue to soar, crossing the 17.4 million mark on an annualized basis for new cars and light trucks in August,” said Amy Crews Cutts, senior vice president and chief economist at Equifax. “The abundance of high-quality vehicles for sale, the attractive financing options available, and the ever-increasing age of cars on the road today have created an environment that makes it easy for consumers to say ‘yes’ when it comes to purchasing a new or used car.

“Importantly, auto loan originations to borrowers with subprime credit scores remain stable, providing additional evidence that a bubble is not occurring in that space,” she added.

On that note, the total number of new loans originated year to date through June for subprime borrowers, defined as consumers with Equifax Risk Scores of 640 or lower, is 3.9 million, representing 31.2% of all auto loans originated this year. This is a slight decrease in share from this same time in 2013.

Similarly, the total balance of newly originated subprime auto loans was $70.7 billion, an eight-year high. The total also accounted for 27.8% of the total balance of new auto loans, a slight increase in share from the previous year. However, serious delinquencies represented 1.05% of total balances outstanding, a decrease of 8% from same time a year ago.

Year to date in June, the average loan amount for borrowers with risk scores of 680 or lower increased the most, showing a 3% increase from the previous year. Loan sizes among borrowers with risk scores of 760 or higher showed little change from the same time a year ago.

The report also showed that the total balance of auto loans outstanding in August was $924.2 billion, an all-time high and an increase of 10.8% from same time a year ago. The total number of auto loans outstanding stood at more than 65 million, a record high and an increase of more than 6% from the same time last year.

By source, balances on outstanding loans funded by banks, savings and loans and credit unions totaled $453 billion, while the total number of loans was more than 31.4 million. Similarly, total outstanding balances for loans funded by auto finance companies was $471.2 billion, while the total number of existing loans was 34.1 million.

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