Dealers Speak: Special Finance Company Survey

Special Finance companies are like watching the sea. The sea has high and low tides, and times when you are on top of the wave or down in its trough. Today’s hero can be tomorrow’s zero, and vice versa. Therefore, each month Special Finance Insider (SFI) will canvass Special Finance managers and dealers from more than 100 of the top SF dealerships around the country, as well as the top SF trainers to find out where the departments are placing their business most often.

Who’s Hot? Who’s Not?
SFI asked SF managers which finance companies had become more aggressive in the marketplace over the past 60 days. Additionally the SF managers were queried as to which finance companies had really cooled in the market, making deals tougher and advances shorter.

The responses indicate, often, both relationships and geography have a keen impact on the managers’ sentiments. AmeriCredit is a great example of this. When compared to other finance companies in the SF market, AmeriCredit has always had a larger number of regional branches. With each branch comes a slightly different interpretation for their credit buying metrics, and certainly the presence of more personalities from which relationships are derived.

Of all the dealers responding 27 percent felt AmeriCredit was the finance company that had changed directions becoming the most aggressive over the past 60 days. That easily outdistanced the two companies tied for second with 12 percent – Consumer Portfolio Services (CPS) and Wells Fargo. At the same time 15 percent of the reporting dealers reported AmeriCredit was the company that had tightened the buying policies the most. Those dealers reporting the tightening were nearly all in the same geographic region – northern Indiana and Ohio.

The two companies that were heavily panned by dealers for the restrictive buying over the past 60 days were HSBC and Triad Financial. More than one third of the dealers (35 percent) stated that HSBC had significantly tightened up, and Triad Financial at 19 percent had also been disappointing departments. One SF manager stated, on the grounds of anonymity, Triad officials had commented that they had to tighten up to balance their portfolio which had not been performing as well as expected. In any case, both companies are ebbing rather than flowing.

Dealers and managers were also asked where they would first look to place deals for customers in two different SF market niches. First, where would they take a customer with a 550 Beacon or FICO score, $2000 mo gross income, and a decent auto trade-line (no more than two 30-day lates over the last 24 months)? The answers were clear and decisive. 46 percent responded that it would be best placed with CitiFinancial while 42 percent would look to AmeriCredit. Wells Fargo was a distant third at 15 percent

The second credit profile was a 475 Beacon or FICO score, $2000 mo gross income, and one-good non-auto trade-line? The results were even more decisive with CPS gaining the nod with 54 percent of the dealers. Drive Financial and United Auto Credit Corporation (UACC) were named second and third by 19 percent and 15 percent of the responding dealers respectively.

Contract Terms
Responding managers and dealers reported the average term contracted was 63.5 months at an average of 17.61 percent APR. The average true cash down and trade equity down was reported at $1181. While the median contract term and interest rate did not differ from the mean, the median true cash down was $1000. These terms will be monitored monthly and reported here in Special Finance Insider.