Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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SPECI A L FIN A NCE SUBPRIME SNAPSHOT At this year's Subprime Conference, dealers who attended the Elite Performers session listed the fnance sources that are funding deals for their customers in Tiers 1-4 and three niche markets. The chart below represents a small sample, but it's a good place to start for dealers who want to open their doors to credit-challenged car buyers. Credit tier Tier 1 (nearprime) Tier 2 (traditional special fnance) Tier 3 (higherfee fnancing) Tier 4 / new vehicles Tier 4 / used vehicles Open Chapter 7 Bankruptcy Military First-time buyer Credit score 620-699 540-619 525-575 450-540 450-540 Not a key factor Not a key factor Not a key factor Customer characteristics · Higher score and depth of credit fle · Likely frsttime SF buyer · Stable at residence and job · Good income · No major derogatories · More money available for down payment · Foreclosures and short sales generally acceptable · Stable employment and income · Higher loan-tovalue (LTV) ratio · Lower paymentto-income (PTI) ratio · Decent car credit · Stable at residence and job · Foreclosures generally acceptable · Shorter time on job, tight income · LTV: 115% to 120% · PTI: 12% to 15% · Some good credit, more derogatory · May have prior repo or foreclosure · Verifable income and residence · Up to 50% debt-to-income (DTI) ratio · PTI: up to 15% · Short time on job, gaps in work history · Thin credit fle with multiple derogatories · Low, hard-toprove income · No proof of income but can prove U.S. citizenship · DTI: up to 50% · PTI: up to 20% · Short time on job, gaps in work history · Thin credit fle with multiple derogatories · Low, hard-toprove income · No proof of income but can prove U.S. citizenship · Recently fled Chapter 7, not yet discharged · Some good credit history · In bureau for fve years · Stable employment and income · Current, active military personnel · Rank of E-1 or higher · At least six months remaining enlistment · PTI: 27% (E-1, E-2, E-3); 30% (E-4) OR 45% of total income less obligations · Credit school · No more than two jobs in the past year · No gaps in work history · Monthly income of $1,650$2,000 · 165% of lefthand side of NADA book · PTI: 18.5% maximum Net down payment / fees Zero to $495 / zero to $100 $500 (some cash) / $300 $1,000 (more cash) / $750 $2,000 (signifcant cash) / $600 $2,000 (signifcant cash) / $1,200 (often shared risk) Zero to $500 (cash) / zero to $750 Zero to $500 (cash) / zero to $1,500 $2,000 (cash) / $1,000 to $1,500 Loan details (average) · Amount fnanced: $23,664 · Term: 69 months · APR: 11% · Monthly payment: $486 · Amount fnanced: $17,900 · Term: 66 months · APR: 16% · Monthly payment: $425 · Amount fnanced: $15,810 · Term: 62 months · APR: 21% · Monthly payment: $408 · Amount fnanced: $22,000 · Term: 72 months · APR: 4.6% · Monthly payment: $375$450 · Amount fnanced: $8,700 · Term: 44 months · APR: 25% · Monthly payment: $300 · Amount fnanced: $13,500$15,000 · Term: 60 months · APR: 19% · Monthly payment: $350-$400 · Amount fnanced: $14,000 · Term: 60 months · APR: 19% · Monthly payment: $350 · Amount fnanced: $13,000 · Term: 60 months · APR: 19% · Monthly payment: $350 Finance sources Most captives and credit unions, Ally, Capital One, GM Financial, Santander, TD Bank, Wells Fargo Most credit unions, Ally, Capital One, Chase Custom, Condor Capital, GM Financial, Prestige Financial, Regional Acceptance, Santander, Wells Fargo Some credit unions, Ally, CPS, Capital One, Chase Custom, Exeter, GLS, GM Financial, Regional Acceptance, Santander Ally, Chrysler Capital, Hyundai Motor Finance, Santander, TD Bank, Toyota Financial, Wells Fargo Many regional and local sources, American Credit Acceptance, AutoTrakk, CPS, Credit Acceptance, GLS, GO Financial, Santander, Tebo Financial, UACC, Westlake CPS, Credit Acceptance, First Investors, Friendly Finance, Prestige Financial, Tidewater, UACC Coastal Credit, SNAAC, US MILES Some credit unions, American Credit Acceptance, CPS, Regional Acceptance, Wells Fargo (with equity) 40 AUTO DE ALE R MONTHLY • DECEMBE R 2013