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Volvo Launches U.S. Captive Finance Arm

February 08, 2012

ROCKLEIGH, N.J.Volvo Cars of North America announced the establishment of Volvo Car Financial Services (VCFS), which will begin providing financial services products to Volvo retailers in all 50 states later this year.

"Launching a true captive finance arm is the most important step we will make this year to support our dealer network and customers," said John Maloney, president and CEO of Volvo Cars of North America. "This is a key initiative in our long-term growth plan. We expect to have the commercial loan products available within six months and the consumer loan and lease products available before the end of the year."

VCFS is a wholly owned subsidiary of Volvo Car Corp. and will be based in Rockleigh, N.J., according to the company. Products will include retail financing and leasing on both new and pre-owned Volvo vehicles, while programs offered will represent both financing at standard market rates and promotional offers supported by Volvo Cars of North America.

VCFS financing products will be funded by Bank of America, with final contracts between the two companies to be executed in the upcoming weeks, according to Volvo Cars of North America. BofA Merrill Lynch also will become an exclusive provider for certain VCFS automotive loan and lease securitizations in the U.S. 

In addition to funding, VCFS will license Bank of America's proprietary underwriting and risk-based pricing technology to support the credit process, according to the company. VCFS will have its own separate credit policy and credit staff. 

"Volvo now will offer a highly competitively priced captive loan and lease product for Volvo customers, and we're glad to back that up with our experience and expertise," said John Hyatt, president, Bank of America Dealer Financial Services. "Our solutions aren't one-size-fits-all at Bank of America. We are thrilled to help Volvo reach this milestone through our customized and flexible funding model."

 While VCFS will originate and fund retailers directly on contracted retail and leasing products, the servicing of contracts will be managed by CenterOne Financial Services LLC, according to the company.

"Rather than re-create our own loan and lease servicing organization, we decided to leverage CenterOne's world-class servicing platform while maintaining a Volvo-branded customer experience," said Tony Nicolosi, president of Volvo Car Financial Services.

Along with consumer financing, VCFS, working with Bank of America, will provide Volvo retailers with co-branded commercial financing products such as inventory floor plan, working capital loans and real estate loans, according to the company.

"Bank of America already is a leading provider of commercial products for Volvo retailers, and with an enhanced captive product offer, we anticipate providing floor plan loans to a majority of our U.S. Volvo dealers," Nicolosi said.

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