E-Loan, Inc., an online lending company, today announced June 24 that it has secured a $540 million credit facility with Merrill Lynch to support its prime auto loan production.
According to the company, the new credit facility mirrors common asset-backed financing structures for auto receivables. E-Loan, Inc. has created a qualified special purpose entity, E-Loan Auto Fund One, LLC, which will purchase prime auto loans from E-Loan, Inc., and hold the loans. The new credit structure enables E-Loan to have greater control over the pricing, underwriting and operational processes associated with its prime auto loan business.
"This evolution of E-Loan's auto loan business further supports our diversification strategy and growth prospects," said Joe Kennedy, president and chief operating officer of E-Loan, Inc. "By providing auto loan consumers with even lower rates, we've enhanced our ability to attract more customers. At the same time, we benefit from greater revenue per auto loan and a marked increase in our return on capital."
E-Loan, Inc. will continue to sell all its subprime auto originations to various subprime auto loan purchasers as it does today. Subprime auto loans are underwritten according to guidelines established by the ultimate loan purchaser. E-Loan, Inc. established a $10 million line of credit facility with Merrill Lynch to support the interim funding of subprime auto loans prior to their sale to the ultimate loan purchaser, typically within ten business days.
About E-Loan, Inc.
E-Loan, Inc., an online provider of consumer loans, offers consumer loans and debt management services online at www.eloan.com or 1-800-E-LOAN-22. E-Loan has reengineered the consumer loan process by offering a broad choice of products from many lenders for mortgages, home equity loans, and auto loans in a secure online environment, combined with personal service from loan consultants. The company's loan processing centers are located in Dublin, CA and Jacksonville, FL.