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ACC CONSUMER FINANCE
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The Problem:
Historically, automobile dealers focus on the current transactional outcome of the sales and financing process where the dealer F&I office seeks to maximize short term profitability. The incentive is to sell and roll the automobile as quickly as possible. The lending guideline of loan programs are often pushed to the boundaries of what may be acceptable in terms of risk and pricing and still suitable for the then automobile sales situation.
The Lender seeks to minimize risk and price financing to maximize profit through various pricing, procedural, or structural methods. These methods such as discount/reserve pricing, exception pricing and others are designed to mitigate risk once the contract is purchased from the dealer.
In short, the entire value chain is positioned to be in a constant adversarial state where automobile dealers (other than minimal recourse terms) are not aligned with the lender investor long term creating incentive issues.
This adversarial approach works when the economy functions well as the value chain produces excess profits to fund the constant game of cat and mouse between automobile dealer and lenders. This works less well within a general economic environment where there is low or no excess in the system.
The Solution:
ACC Consumer Finance's program creates a framework and guideposts for the auto lending ecosystem to be aligned and sustainable. The right attitude about the non-prime/sub-prime auto finance business, coupled with the right processes for capturing the non-prime/sub-prime customers business, will help Dealers sell more vehicles.
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