Strength and Commitment in Capital One's Dealer

Subprime Program

A mainstay in the subprime auto finance market – even throughout recent market turmoil – the Capital One Dealer Subprime Program has a footprint which covers the majority of franchise dealers nationwide. The two factors that have played a major role in the company’s longevity in today’s tough market are its capital strength and commitment to both the market and its dealer base.

“We’re committed to this business and will continue to help our dealer subprime network. We will continue to be cautious in this space, from a credit underwriting dimension, to ensure that we’re well positioned for the future and can help our dealers, to the best of our ability,  no matter what the economic environment,” said Steve Braskamp, vice president of credit and business strategy. He added that Capital One continues “to remain strong from a capital dimension.”

Recently, dealers confirmed the company’s dedication to the subprime market. In the 2008 Auto Finance Survey (printed in the Nov. 2008 issue of Auto Dealer Monthly), dealers voted Capital One as a top special finance company in three different credit tiers. In the 620- to 581-credit score tier, Capital One placed second with a market penetration of 10.2 percent. The company took the number-one spot in the 580 to 541 tier with a market penetration of 12.6 percent and took third place with 10.2 percent market penetration in the 540 to 501 tier. Beyond static votes for the company in the different credit tiers, dealers applauded the company’s flexibility, quick funding, loan terms and buying power in the subprime arena.

Capital One is a company that values it’s relationships with dealers, which is why, in 2007, the company introduced relationship managers to the dealer/finance company partnership. The company wanted dealers to be able to reach a point person whenever they have questions or need help structuring deals to fit inside the company’s buying box.

“It’s really providing [dealers] with a level of service that’s top-notch in the industry,” said Braskamp. Each dealer has a dedicated relationship manager, and each relationship manager is part of a pod of four relationship managers. So, if a dealer’s dedicated relationship manager isn’t available, the dealer can reach one of the other three relationship managers for assistance.

The Dealer Subprime Program covers the 520- to 660-credit score range, and Braskamp said they’re especially competitive in the mid-level of this spectrum. The company is also particularly competitive in low loan-to-value (LTV) ratios and likes to see overall LTVs below 110 percent. With regards to amount-to-finance, the company has a wide scope, with amounts financed between $10,000 and $30,000. Braskamp added that for the right deal, the company has flexibility.

Like all finance companies today, Capital One monitors the performance metrics of each dealer, which is why dealers should be wary of shotgunning deals. The company monitors application flow, the volume of business each dealer does with the company, look-to-book ratio (how many deals submitted to the company compared to how many it approved), approved-to-funded ratio (how many deals it approved compared to how many deals it actually funded), and defaults. Braskamp stated, “It really comes down to the profitability of the relationship.”

For franchise dealers looking to work with Capital One in the subprime arena, the company is taking applications and signing up new dealers. While the company expects to keep its dealer base at or around the same level in 2009, it is reviewing applications for good dealer partners. Dealers who are committed to serving the subprime sector, meet certain criteria set by the company and have programs that match up with Capital One’s may very well be a good partner. For more information on the Capital One Dealer Subprime Program, call 888.396.2623 or visit www.CapitalOne.com.