October 2024
Ford Credit’s Flex Buy program volume is on track to grow 25% year over year.?
The program allows consumers to make lower payments for the first three years of their loan, Shannon Mokhiber, executive vice president for North America at Ford Credit, said during a fireside chat on Oct. 9 at Auto Finance Summit 2024 in Las Vegas.??
“It’s a 66- or 75-month contract. The first 36 payments are about 15% to 20% lower than a comparable 66- or 72-month loan,” she said.??
“It gives customers a little bit of relief early on and then, ideally, that customer over time, they’re making more money, their incomes are increasing. Then they have an option at month 37; they can either continue to make payments, or they can go to the dealer and trade out and get something new.”?
Lawyers expect wide-ranging implications from the National Automobile Dealers Association’s legal challenge to the Federal Trade Commission’s Combating Auto Retail Scams (CARS) Rule. ??
The Dodd-Frank Act gave the FTC the authority to determine what is unfair and deceptive in dealer sales practices, Michael Benoit,?partner at law firm Hudson Cook, said during a panel discussion on Oct. 8 at Auto Finance Summit 2024. The FTC “could easily” write a rule that says it is unfair and deceptive to negotiate pricing for products, he said.?
“I think the FTC would like to change the way that dealers do business and get rid of negotiated pricing entirely,” said Benoit, who specializes in automotive finance. “So that there is a price for a vehicle and a price for every single ancillary product, none of it negotiable. They would love to see dealer participation go away. If not go away, then they would like to see everybody paying the same across the board. That would eliminate a lot of the fair lending concerns.”?
Chase Auto has cut funding time to minutes using technology, and expects more contracts to be funded faster by yearend.??
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The bank recently invested in technology to “fund electronic contracts in minutes versus days,” Anne Alburo, national credit executive at Chase, said during a panel discussion at Auto Finance Summit 2024 on Oct. 9.?
“This has helped our retail relationships, because we’re able to fund their contracts faster, as well as our commercial clients, because we’re improving good cash flow,” she said. Faster contracting “is starting to gain traction, and we expect a higher number of our application volume to go through this process by the end of the year.”?
Bank of America is seeing an uptick in auto refinance activity on the heels of the Federal Reserve lowering the benchmark interest rate by 50 basis points last month. ?
The bank is investing in streamlining the refi process for borrowers. ?
“We have a refinancing product. The market has been dormant with the rate environment, and we’re starting to see a slight pickup with the first [interest rate] change … in the last couple of weeks,” Fabien Thierry, head of consumer vehicle lending products at Bank of America, said during a fireside chat Oct. 7 at Auto Finance Summit 2024. ?
Tricolor Auto Acceptance has seen a 20% decline in losses since updating its risk model this year.
“We upgrade our risk model every 12 to 18 months. We just released our sixth version of the risk model earlier this year,” Mauricio Delgado, chief strategy officer at Tricolor Holdings, said during a panel discussion Oct. 8 at Auto Finance Summit 2024. “It took us about nine months to collect the data and train the model with the data. We went from two data vendors to five data vendors.”?
As a result, Tricolor’s losses are down 20% year over year, he said.??