Wednesday, Jul. 18, 2007, 08:00 PM UPDATED 11:59 AMBy Nick Zulovich
GREENWOOD VILLAGE, Colo. — Universal Special Auto Finance said the national rollout of its indirect subprime auto lending is progressing smoothly and the company is now live in 13 states. Officials expect Universal to be live in nearly all states within six months.
"We are in our official rollout and funding loans," Steve Norbut, vice president of dealer sales, reported to SubPrime Auto Finance News. "We are currently active in 13 states and will add states as we go along the remainder of the year and the first part of 2008."
According to Norbut, the lender is now available in California, Georgia, Idaho, Illinois, Missouri, New Mexico, Nevada, North Dakota, Oregon, Tennessee, Utah, Washington and Virginia.
Moreover, Norbut said the company will be available in all remaining states within six months, with the exception of New York, Hawaii and Arkansas.
"We can accept additional dealers in the active states," he said. "Our launch was predicated on making sure all systems were in place and operating how we expect them to. Right now, we continue to monitor and ‘stress test' the systems from a volume standpoint to ensure seamless operations as we expand throughout states and build volume."
Universal is live on RouteOne and Finance Express, Norbut highlighted. And he expects the company to be live on the DealerTrack platform as well as others within a few weeks.
The indirect lender works with both franchised and independent dealers.
"Universal manages the growth in loan volume through the speed with which we expand into new states and activate new dealers, rather through limiting individual dealer volume," Norbut explained.
"In fact, we prefer larger dealerships to smaller ones. Our activation strategy has been to focus on the large accounts we knew well and can provide significant volume, while the smaller dealers provide good geographic dispersion to keep the portfolio in line," he added.
The nonprime lender was established in the fourth quarter of last year. Earlier this year when it began setting up business, Norbut explained what Universal is looking for in the dealers it works with.
"We look for strong consistent financial health, clean and well-organized dealerships, and most importantly, the proper inventory for our program," Norbut explained.
"Interested dealers can visit our Web site to request a dealer packet, which contains all program guidelines as well as a dealer agreement," Norbut told SubPrime Auto Finance News. "If they complete this packet and return it to us, we will them and continue the activation process."
He also noted that the company monitors dealer performance on an ongoing basis to ensure compliance and performance. He pointed out that Finance Express helps with the monitoring of independent dealers through its system.
"Our goal was to ensure consistency in credit decisions, fast responses and strong support to our dealer partners so they can rely on us to help them make more sales, more profitably," Norbut said.
"We are very proud that we were able to launch with all systems operating at full capacity so dealers can expect and receive top-quality service from Universal," he continued. As we expand through the end of the year and beyond, we remain committed to our vision and confident that we can become the special auto finance lender of choice for many more dealers."
To ensure dealers create the right deal the first time, executives offered a "road map" outlining the minimum credit requirements needed of customers for approval.
The requirements include:
—A minimum credit score of 500.
—A minimum income of $1,500 a month from a single source.
—No more than one bankruptcy, and it must be discharged; no dismissed bankruptcies.
—No more than one repossession and none within the last year.
—No more than one previous foreclosure and none within the last year.
—Qualifying credit: An aggregate $1,000 high applied for credit of three or fewer trade lines, with no more than 2x30 delinquent within the last 24 months on any one account.
—Derogatory Credit: 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.
—No more than two Universal loans at one time.
"We look at a comprehensive view of the credit file, since the credit file's factors are all dynamic in relationship to each other. It is very difficult to pinpoint one aspect that helps or hurts a consumer," explained Sheryl Gurrentz, president and chief operating officer. "We look at patterns and stability. We are looking for a minimum credit threshold, which is determined by credit score.
"Once this minimum qualification is met, then Universal's custom score determines other factors such as APR, term, payment, etc.," she added. "We provide a dealer with the minimum credit qualification on our grid. If the loan meets this minimum, we will approve — subject to verification. Universal saves dealers time by conducting auto verifications through Lexis Nexus."
The company has also established a relationship with PAR North America, among others.
Universal said interest rates will range from 15.99 percent APR up to state max APR, depending on the consumer's credit history. Additionally, the company noted that once all the stipulations are satisfied, most contracts are funded within 24 hours through ACH.
Describing a typical Universal loan, Norbut said it's about $18,200, with a 66-month term.
"Universal's maximum loan term is 72 months," he said. "Guidelines are not model-year specific on 72-months, but rather based on mileage. We allow up to 80,000 miles."
Commenting on how business has progressed, John Scordo, chief executive officer, explained, "We have spent a year putting together a strategic team of business partners that bring to the table financial and operational expertise in all areas of the special finance auto loan market, as well as the financial services arena.
"It has taken a lot of time, but we have established that we know we can continue to build upon," he continued. "Every member of our staff, every policy and procedure, each business alliance, financial institution and auto dealer has been thoughtfully chosen. We are very proud of what we have created."
Meanwhile, Gurrentz added, "This is a very exciting time to be a part of this industry. With special auto finance accounting for more than one third of all auto loans in the U.S., Universal has developed an innovative special auto finance lending model that offers significant efficiency of scale and automation that minimizes risk through consistency in credit decisioning.
"The many unique features of Universal — its highly automated system and its partnership with CSC (Computer Sciences Corp.), for example — make it one of the most powerful financial and underwriting tools in America," she said. "Further, Universal's distinctive programs enable financial institutions and investors, whether national or international, to participate on a turnkey basis, much like an investment."
For more information on the company, visit