The recent pullback (or pullout) of subprime finance companies means dealers are more closely examining other financing sources available to them. One consistent and longtime finance company many dealers are looking to and doing business with is Western Funding, Inc., based in Las Vegas, Nev.
Dwight Cope, president of Western Funding, said business is up about 25 percent since other finance companies have tightened their programs and/or pulled out of the market, and the calls from dealers are still coming in.
Western Funding has an active dealer base of over 1,000 dealers, most of which are independent, in 49 states. More franchise dealers are taking notice, though. Gary Shannon, vice president of sales and marketing at Western Funding, said the type of franchise dealer he’s hearing from – on a daily basis – is “the franchise dealer that has become educated and realizes that he can’t make it selling just new cars.”
While many of today’s finance companies use auto-decisioning, Cope said Western Funding is a hands-on, old-fashioned special finance company. “We like to put our hands on [every deal],” meaning all decisions are made by people, not an automated system. While the key to human decisioning is consistency, the company does not set parameters by FICO or Beacon score. Credit reports are examined in detail during the decision-making process, but score is not a tell-all number.
To both Cope and Shannon, what’s important to find out about customers is their stability, ability to pay and willingness to pay, especially when looking at how much to advance. Cope added, “If [a customer has] four or five pages of derog credit on a credit report, they’re not going to pay me if they don’t pay anybody else. However, if they’ve re-established and they’ve got some good credit on their bureau along with some bad from six or 12 months or so ago, we’ll give them a chance on the right vehicle.”
Common sense is a big factor in decision making at Western Funding. “If someone has two repos, why would we want to be the third? Now, if they have one repo, maybe there are some extenuating circumstances … and nine times out of 10, we’re going to give them another shot. Common sense comes into play. It has to make sense,” said Shannon.
The company also looks closely at what vehicle the customer wants to finance and the individual’s income. The average amount typically financed through Western Funding is between $7,500 and $8,500. The maximum payment is 20 percent of a customer’s income, but Shannon said the average is actually lower than that.
Cope added that while payment is dependent on income, the company likes to keep payments around $250 per month. He said, “We specialize in more of the transportation-type vehicles for customers, so they can go to and from work every day … Our customer base doesn’t drive the high-end, big-ticket vehicles.” As for loan-to-value, Cope estimated the company’s averaging 80 to 90 percent, and while down payment is negotiable, the company likes 10 percent of gross selling price with a minimum of $500 down.
Dealers can expect these parameters to remain steady. Western Funding hasn’t made any recent changes to programs, and there are no plans to do so. Cope said, “Our programs have been the same for a very long time, and we don’t fluctuate like other [finance companies] do. We value the customer’s worth … We’ve been doing this for 46 years. We’re consistent in our business, and we’ve stuck around. We try to put deals together [for dealers].”
Also important to Western Funding is cultivating dealer relationships. “It’s really a partnership between us and the dealer. We’re looking for a long-term relationship, and that takes a lot of trust—a lot of trust in us and trust in the dealer. It takes honesty [from both sides], and it’s a long-term relationship we’re looking for with dealers.” Cope added that he has dealers who have been with him for more than 20 years.
For in-depth information on Western Funding’s programs or to find a branch in your area, visit www.WesternFundingInc.com.
Vol. 2, Issue 5