When it comes to Auto Dealer Monthly’s annual Auto Finance Survey, the one consistent factor that always exists is that the special finance area remains in a constant state of flux. The good news is that the change in 2010 involves more opportunity for dealers and their departments.
In 2010, the biggest news is the increase in advance being offered to top SF credit tier customers and a corresponding increase in cash down payment to go along with them. As reported here in Auto Dealer Monthly in previous months and corroborated by the survey results, advances to the Tier 1+, Tier 1 and Tier 2 SF customers increased on average well over $1,000 per contract in 2010, to as much as a $4,000 increase for the Tier 1+ and Tier 1 customers over 2009. Even with average finance terms extending to nearly six years for those tiers, monthly installments now are approaching $500 on average.
With little appreciable difference in opinion in 2010 towards the favored finance companies among independent and franchise dealers (with a few exceptions as noted), the accompanying tables break out the different SF credit tiers (which are classified by score even though the score, per se, has little to do with the credit decision by the finance companies) and highlight their differences. The finance companies are then ranked within each credit tier as determined by dealers and their managers.
With regards to the rankings, please keep in mind that one particular finance company might have significantly different loan terms than the others in a tier. The purpose of the tables is to help you organize the information and identify finance sources you may wish to add to your arsenal.
As far as market leaders, in general Capital One Auto Finance (COAF) was easily the market leader in Tier 2, the traditionally the most popular SF tier, and a close second in Tier 3. Wells Fargo and GM Financial/AmeriCredit follow COAF in Tier 2. Wells Fargo then jumps to the forefront as the credit tiers rise, and AmeriCredit does as the credit tiers follow. Currently all three companies, depending on the customer credit, are highly regarded by franchise dealers. While COAF strengthened its position among the dealers in 2010 due to its outstanding service and lightning-quick funding, GM Financial has increased loan volume by three-fold in recent months. While our annual Auto Finance Survey is always designed to report current dealer opinion, as we go to press the sale of AmeriCredit to GM has just closed and the question that all non-GM dealers (especially independents) want to know is: How is it going to change things for them going forward?
Finally, Santander Consumer USA (formerly Drive Financial) continues to gain ground. On September 1, 2010, they closed the acquisition of a large auto portfolio from Citi Financial Auto as well as the servicing rights to the balance of Citi’s auto portfolio. Dealers report the transition has been seamless and along with Santander’s recent fee reductions, they seem poised for continued growth.
Vol. 7, Issue 11
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