Santander USA Expands Drive Program

Advances Now Based on Market Value

Late 2008 and early 2009 brought news of finance companies tightening their guidelines and shrinking originations, and with NADA values not keeping up with market values, landing profitable special finance deals has been a challenge for many dealers. Now, however, some companies are opening back up and planning for growth.

Santander Consumer USA recently re-engineered its special finance program, Drive (also known as Drive Financial), to open up the program for dealers so they can get more deals bought and make more off those deals. Tom Dundon, president and CEO of Santander Consumer USA, said, “We wanted to make sure we enhanced the program to give [dealers] the room they need to sell cars.”

To determine advances, the Drive program now looks at auction data and BlackBook values. Dundon said, historically, the company relied on NADA and Kelley BlueBook for advances. He added, “What we found was, we hadn’t left the dealers enough room in our advance rates so they could put deals together.”

He said the buyers at Drive are excited about the new program “because they think they can help dealers without having to switch cars so much … As long as [dealers] own that car for the market price, our buyers have the flexibility to make sure the dealer has enough room to deliver that vehicle to the customer.”

Other highlights of the new program include:

• Reduced fees – Dealers will save up to $1,000 per deal in fees, estimated Dundon. Additionally, fees will now run on a sliding percent basis as opposed to a straight dollar amount. “All the fees will be a percentage of amount financed,” he stated. “The fee will be based on the structure of the entire deal.” He specifically mentioned credit, affordability and down payment as factors that influence fees.

“When the customers are put into payments they can afford and cars that perform better for us, [dealers] can actually drive their price way down,” he said. When it comes to affordability, payment-to-income needs to be less than 15 percent, with the average around 8 percent. Also, if someone with poor credit has a large down payment, the two could offset one another.

• Higher advances – Advances will increase 10 to 20 percent. He estimated this will amount to $1,000 more per deal in advances. The company’s sweet spot will be around 130 to 135 percent of BlackBook.

• Extended terms – While some finance companies are shying away from 72-month terms, Drive is not. “[Dealers] don’t have to do a shorter term. We’re going to give everybody the 72 months if they need it to keep the payments affordable. The term doesn’t necessarily affect our price anymore,” said Dundon.

• Back-end products – On all approved deals, dealers can add back-end products like service contracts and GAP. He expects products to be added onto 75 to 80 percent of deals, as compared to only 25 percent before the company’s program was overhauled.

• Waived stips – Thanks to technology and the increased availability of reliable information, Drive utilizes systems that verify customer information, which eliminates the need for certain stips. “When we get good information and test it, we’re able to waive stips,” concluded Dundon, adding that waiving stips saves the dealer and the finance company time. In some cases, proof of income, proof of address and the phone bill will be waived.

Additionally, Santander Consumer USA is planning growth. “We want to get more deals,” said Dundon. The company has been originating about $100 million worth of auto loans per month through the Drive program, and he would like Drive’s monthly originations to be around $400 million per month. “In our biggest month, we were doing over $350 million in originations, and we have a goal to exceed that [per month] next year.”

To reach that goal, Drive is looking to create partnerships with new dealers and reestablish relationships with some they stopped doing business with over the last couple of years. “We’re going to open it up to the entire country … We’re starting to add some independents,” stated Dundon. However, he alluded to the possibility of rolling out a program specifically designed for independents in the near future. “We’re analyzing whether or not we’re going to offer this and some expanded products to the independent dealers.”

If you are already signed up with Drive and have questions about the new program, call you area sales manager. Dealers who would like to apply for and/or have questions about the program can call 214.237.3552.