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Chase Targets Near-Prime Buyers, Floorplanning Business

July 11, 2006

Chase Automotive Finance is expanding its near-prime vehicle lending in an effort to take dealer business away from automakers’ captive finance companies, according to Automotive News.

Chase defines the near-prime market as consisting of car and truck buyers with midrange credit scores between 620 and 680 (scores generally range from 375 to 900). Near-prime lending accounts for 25 percent of the vehicle loans and leases Chase writes, up from 7 percent before Chase targeted the segment in late 2005, Automotive News reports.

The bank has added other criteria for assessing credit risk, such as vehicle make. Chase Automotive Finance president Joseph Scimone says that models with lower residual values, higher repair costs and a greater prospect of repossession carry higher risk.

Chase also seeks to take floorplanning business away from captives, which handle most financing of dealer inventory. Chase had a $1 billion floorplan portfolio before the Bank One merger and $4.5 billion immediately afterward. That business now is worth $7.5 billion, Scimone says.

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