When David Kelly was approached at the 2007 NADA Show to get his insight on a subprime lending program, the F&I director for the McLean, Va.-based Easterns Automotive Group was intrigued. He was even more intrigued when he learned the people behind the new program happened to be the former executive officers of a company that once handled 200 deals per month for his subprime-geared dealership.
Kelly’s dealership has since become one of the first dealerships to sign up with the company. He added that he’s received approvals, but just hasn’t delivered vehicles yet. However, other dealers he’s talked to said they’ve experienced a smooth, one-day process to get deals funded.
“They really fill a unique niche for any dealer that’s doing subprime auto finance,” said Kelly. “They’ve been very upfront with us from the get-go and they were very smart on how methodic they rolled this program out.”
The name behind the new program is Universal Special Auto Finance, which was started by the former executive officer team of Centrix Financial Auto Services. After seven months of working out the details and talking to F&I professionals like Kelly, the Greenwood Village, Colo.-based company is up and running in 13 states. The plan now is to roll out the program nationally.
“We intend to be 85 percent franchise dealers and 15 percent independent dealers,” explained Steve Norbut, executive vice president of U-SAF. He said the key so far was his team’s ability to stay in contact with Centrix’s large subprime-oriented dealers. “We started out with the larger subprime dealers because they truly understand the market.”
Other former Centrix execs on the team include Chairman Robert Sutton, Centrix’s former CEO; CEO John Scordo, who worked for Centrix from 2001-2006; President and COO Sheryl Gurrentz, Centrix’s former executive consultant to the CEO; General Counsel Michael Connolly, Centrix’s former general counsel; and Norbut, who spent two years managing Centrix’s dealer network.
Laying out the company’s buying criteria, Norbut said the company will accept a vehicle buyer with a minimum 500 credit score, and a minimum income of $1,500 a month. Consumers also can’t have more than one bankruptcy (must be discharged, not dismissed), and no more than one repossession on their record (and none within the last year). Consumers also can’t have more than two U-SAF loans at one time, Norbut added.
Going deeper, Norbut said qualifying credit will be an aggregate $1,000 high applied for credit of three or fewer trade lines, and with no more than two, 30-day delinquencies within the last 24 months on any one account. As for credit-challenge customers, U-SAF said it will accept no more than $2,500 aggregate derogatory credit in the last 12 months, and no more than $5,000 aggregate derogatory credit in the last 24 months.
Providing loan servicing will be Computer Sciences Corp., which U-SAF chose in February to provide banking services. The company also signed up with Finance Express last December to provide Web-based financial services to independent dealerships. The company has also has a number of companies to provide dealer resources, such as PAR North America and Lexis Nexis.
Norbut says that the company has started out very calculated, planning out the type of volume they expected in the first couple of months. However, the company’s progress has been encouraging and Universal plans to add on dealers and really push volumes in the near future.
“We truly understand the subprime dealer and customer, and we plan to give them all the tools to work in the most efficient way,” said Norbut. “We’re not about hamstringing a dealer. We give them all the flexibility to figure out the best deal for them and the best deal for their customer — and just make it as easy as we can to do business.”
Flexibility was what Easterns’ Kelly liked about the program, but his familiarity with the company’s executive team was what really won him over. He added that Universal’s credit criteria is very similar to Centrix's. The only difference is the funding process, Kelly added.
“Universal has a very fast call-back time and great flexibility on its program,” he said. “And it really laid the program out on paper. So no matter what you do with that deal structure, you know how it’s going to price. Universal really made it easier to do business, and that’s going to win the hearts of many people.”
