Author Archives: Carguy

Your Car Trade-In Pay-Off – Understanding How It Works!

It’s very easy to get confused about how the pay-off is handled in a car deal. Almost everyone who trades a car into a car dealer on a new purchase has a pay-off on their trade.

The pay-off is how much you owe the lender for your trade. It in no way reflects how much your trade-in is worth, and most often the pay-off is higher than your trade-in’s actual value.

When you buy a vehicle this is how the numbers break down:

Selling price of the new vehicle

+ Any Add-ons like extended warranty, protection package, etc.

+ Sales tax, title, documentation and registration fees

Trade-in allowance

Cash down and rebates

+ Pay-off on trade


= Total Amount Due

Now adding the pay-off back on to the “Amount Due” tends to throw a lot of people for a loop! They have a hard time understanding why the pay-off has to be added back on once the dealer agrees to a trade-in figure.

You must remember, the loan on the trade-in is yours — not the car dealers — and it must be paid off so the dealer can get a clear title to the trade-in. In essence, the car dealer is buying the trade-in from you, and you can’t sell it to him if there is an outstanding balance owed on it. So the pay-off gets added on to your “Amount Due,” and then the dealer takes that money and pays off the loan. The lending institution in return sends the car dealer a clear title and everyone is happy.

Remember, the pay-off is your responsibility not the car dealer’s. The dealer is actually doing you a service by simplifying the way you pay off your vehicle. It also allows the dealer to control the process so they don’t get stuck with a trade-in that has a lien and an outstanding loan on it.

Now having said that, remember that most car dealers are honest and do business in a legitimate way, and they will pay off your outstanding loan promptly, or as soon as they get the funds on the car deal. It’s to their benefit to pay it off right away so they can then sell the car. If they don’t have a clear title for the vehicle they can’t legally sell it.

However, there have been occasions when a car dealer waits to make the pay-off, or in rare cases doesn’t pay it off at all. This is illegal and can get a dealer in a lot of trouble, but sometimes they are having cash flow problems or, in very rare cases you come up against a crook.

If the car dealer doesn’t pay-off you loan within a reasonable amount of time (one to three weeks) the lender is going to be looking for you to make a payment when it comes due. I have even seen cases where the customer didn’t know for several months that the pay-off hadn’t been made, and it was actually causing late payment entries on their credit report.

Remember . . . I said this was a rare occurrence, so don’t panic if you have a trade-in with a pay-off. There are steps you can take to protect yourself. If you trade a car with a pay-off get a written statement from the dealership signed by either the Sales Manager or the Finance Manager stating that they will in fact pay off your trade-in, and by what date. The statement should include the following information:

  • The date of the document
  • The amount of the pay-off
  • By what date will the pay-off be made by
  • How long the pay-off amount is good for (because the amount changes as interest accrues)
  • The year, make, model, mileage and serial number of the car being paid off
  • The name and mailing address of the lending institution
  • The name of the person at the lending institution who verified the pay-off amount
  • The signature of either the Sales Manager or the Finance Manager

Any reputable dealership should be happy to accommodate your request for this form. In fact, a professional dealership will have such a form as a routine part of their paperwork.

This way if anything goes awry you have something in writing to protect yourself, and to prove the car dealer agreed to make the pay-off. As I said before, most dealers are honest, but it’s always a good business practice to protect yourself.

If a dealer refuses to give you a written statement on the pay-off you should not complete the deal. To me this would be a big red flag! Go do business with another car dealer who will accommodate your request. There are too many honest car dealers out there for you to waste your time with a questionable one.

Source by Tony Iorio

Bank of America Grows Prime Portfolio 6% in 3Q

Via Shannon Clark/ Flickr

Bank of America grew its auto portfolio by 6% year over year in the third quarter, despite rising charge-offs across the industry and an increasingly competitive prime marketplace.

Average auto loans and leases outstanding climbed to $52 billion in the quarter, compared with $49 billion during the same period the year prior, according to the bank’s earnings on Friday.

The lender remained a leader in prime credit quality during the quarter. Experian said Bank of America is the No. 1 originator of new loans to consumers with a Fico score of 740 or higher as of July, according to the report.

Because the bank doesn’t take on much risk in its auto portfolio, analysts have questioned whether the bank can continue to grow in an environment where lenders are fleeing subprime for prime and super-prime credit. Chief Executive Brian Moynihan said this quarter shows that the company can.

“The auto standards have always been high, we’ve always made that a business that we took very little credit risk in,” he said on the call. “The debate has always been, can you grow [with that low of credit risk]? And the answer is, yes. But you’ve got to grow in a rational, responsible basis, and that’s what’s playing out for us this quarter relative to other people.”

Charge-offs and delinquencies have been rising for nearly every auto lender in the space for the past few quarters, but Moynihan said he’s not concerned about the losses in Bank of America’s portfolio. While the lender does not break out specific auto losses, charge-offs were down overall across the bank’s various consumer credit categories, particularly in non-credit card categories.

Bank of America Dealer Financial Services launched it’s own direct lending portal at the start of 2017, which has likely contributed to the increased portfolio. However, it’s unclear how much volume the bank has originated through the service to date.  

David Hollodick, senior vice president of consumer vehicle lending and product executive for the bank’s dealer financial services division, led the bank’s direct lending push and will discuss trends in direct lending at the 2017 Auto Finance Summit, which runs Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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Heritage Navigates ‘Growing Pains’ From Surge in Originations

Heritage Acceptance Corp. is still recovering from a greater-than-expected surge in loan originations last year, Vice President of Sales and Marketing Mike Monaghan told Auto Finance News.

Heritage Acceptance began 2016 with the goal of boosting originations, but the lender did not expect the volume it received, Monaghan said.

“Our goal last year was to ramp up originations,” he said. “We were surprised with the response. We grew both vertically and horizontally,” meaning Heritage was receiving more applications from its current dealer base and signing more dealers.

While Monaghan declined to offer a growth percentage, he said the surge stemmed from the lender’s focus on franchise dealers. “We grew very, very fast last year, and we had a lot of growing pains,” he said. “We are trying to figure out the staffing for the volume we want to get,” he said, referencing that the company did not have enough people on staff to handle the volume.

Heritage’s “renewed focus” is to balance volume yield with staffing growth to service the new business, he added. Elkhart, Ind.-based Heritage Acceptance originated 263 loans in December 2016. It makes loans for a network of 600 dealers in five states.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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How Should a Mobile Car Wash Price Car Lot Washing Contracts – Price Per Car Strategies

Okay so, you run a mobile car washing business and you want to increase your revenue generation by adding some car dealership lot washing contracts. That makes sense because the car dealerships have lots of cars, and they must be cleaned to sell; no one wants to buy a dirty car right? Sure, so your next question is what price point can you charge and still make money. Not long ago, I was asked about this by an already successful car washing entrepreneur;

“I noticed on one of your posts [articles] you suggested $.85 for twice a week. Wow, can it be done for that without have the contract for detailing as well?”

He was referring of course to the synergy gained by detailing for auto dealerships and also maintaining the washing contracts as a bundled service, which is the favored strategy for mobile auto detailers and mobile car washing companies. But what if you only had the lot washing contract and not the detailing contract; does it still make any sense?

Well, yes, in fact, we had many accounts which were only wash accounts at between.65 and $.85 per car, where we did not have the detailing contract yet, for the auto dealership. For instance at the Sacramento Auto Mall, all the car lots are set on the street that looks like a giant circle, and we would have the crews going different directions on that street, and we would never quit. By the time we got done with one side of the street, it was time to start over, they just watched every day all day long.

Some of the other dealerships wanted us to be off of the lot by 10 AM so they could sell cars, which makes it tough in the winter because of the ice formation when you put water on the cars in many areas.

The detailing contracts for auto dealerships are very good when the economy is good, but you must understand that auto dealerships are very slow to pay and you don’t want to become a bank where you are doing services for them and they are paying you for three months. That just costs you a lot of cash flow and all that labor until you get your money.

Remember in a service business “cash flow” is king, everything else is just talk. You’re better off to go find something else to wash rather than letting some company string you out on payments and receivables. And remember that God made dirt on the first day, and that gets all over everything so you should be able to find something to wash other than just car lots.

It appears the mobile car washing entrepreneur agrees and is thinking here too. We used to consider car lots as busy work, keeping our crews busy and thus making money, but it was hardly our best profit center. Please consider all this.

Source by Lance Winslow

PNC Reports Rise in Delinquencies Due to Hurricanes

PNC Financial Services Group Inc. reported a “moderate impact” on auto delinquencies in the third quarter due to the recent hurricanes, according to the bank’s earnings call today.

Auto loans 30 to 59 days past due rose 87% to $71 million from the same time the year prior. The increase was primarily due to higher delinquencies in the auto, home equity, and credit card portfolios in hurricane-affected states, the company reported in earnings.

Additionally, accruing loans 60 to 89 days past due increased 45% year over year to $16 million in the third quarter, also due — in part — to hurricane-affected states. Loans 90 days or more past due increased by $1 million year over year to a total of $5 million, according to the report.

Meanwhile, the Pittsburgh-based bank saw auto outstandings increase 10% year-over-year to over $12.4 billion. PNC was the 21st largest auto lender in the U.S. in 2016 with a portfolio of $12.3 billion, according to Big Wheels Auto Finance 2017.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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Wells Fargo Expects Auto Declines to Continue for Another Year

Via Shinya Suzuki/ Flickr

For the fourth quarter in a row, Wells Fargo Dealer Services’ delinquencies and charge-offs have grown amid a rapidly declining originations volume environment, and the company expects the volume declines to continue into the second half of 2018.

Originations were down 47% in the third quarter compared to the same period the year prior, marking the third consecutive quarter of double-digit originations declines. As a result, auto outstandings dropped 12% year over year to $55.5 billion in the third quarter.

“The decisions we made last year have really worked because the average Fico scores of our customers have now increased, and that’s exactly what we wanted,” said Tim Sloan, president and chief executive of Wells Fargo & Co., during the earnings call. “That said, I think you should expect that portfolio, even if we turn things up a notch, to decline through the fourth quarter and to bottom out sometime in the second half of next year. We like that business, don’t get us wrong, and our expectation over time is that we will regain share in that business. But right now we’re cautious and we have a lot of changes that we have to execute on.”

Chief among those changes is the consolidation of its 57 collections centers into three regional facilities.  

“While that’s happening we’d rather have a higher credit profile of the average customer just so that we know we’re dealing with fewer defaults as we deal with that change,” said John Shrewsberry, senior executive vice president and chief financial officer, during the call.

Additionally, indirect loan delinquencies 30 days or more past due grew to $1.5 billion in the third quarter, compared with $1.3 billion during the same period the year prior.

Indirect loan net charge-offs were up 49% during the quarter to $198 million, largely driven by a “moratorium” on the repossession of borrowers vehicles who have been impacted by the bank’s forced-insurance policy, according to Wells Fargo’s earnings report.

Last year, Wells Fargo self-identified that its collateral protection insurance policy had force-placed insurance on consumers who had already purchased outside coverage. The company stopped placing the policies in September of 2016 and disclosed the practice a year later.

The company began sending remediation checks to the 570,000 consumers impacted by the policy this month to the tune of $80 million total. However, an earlier report identified some 230,000 additional consumers who could be impacted and the company is currently under investigation by both the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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The Pros and Cons of Auto Detailing Clay

When detailing clays first came into the scene they were heralded as the answer to people’s detailing their cars as safely as possible, that is, without damaging their car’s paint work and removing the toughest stains that people used to have to seek the so called professional to deal with. Suddenly, it wasn’t such hard work anymore to remove nasty gunk that stuck to cars, just an application and a mere swipe no elbow grease, no possibility of having to scratch our car’s paint work and your car would have that show room brilliance again.

Clay bars have the combined effect of mild abrasives and powerful powdered detergent to effectively clean any car of almost anything. They have become the thing to have for people who are fussy about their cars. They can remove stains as stubborn as grease and tree sap; even tar that attaches itself onto the exterior. The great bonus is that they work just as well on other materials like glass and plastic removing the need to have different products for different parts of a car’s body. You can cut out most of all the other cleaning products you would need to keep the shine on your car, which means with detailing clays you get the effects that far outdo premium polishes and waxes for cars. The only other product you will need though is a lubricant, Clay bars tend to streak if too little lubricant is used and or stick to the surface. This sticking leaves a film of residue which looks chalky and unattractive on the a surface that should be shinny. If improperly used, clays pick up grease during the cleaning process and you don’t want that as you could easily transfer this grease to the entire car. No matter how good a particular brand of clay is said to be it will not remove oxidized paint nor will it fill in blemishes. The best thing to do for a car that has mild oxidization is to remove the oxidized paint by washing and polishing the car first. Most detailing clay kits have pre-wax cleaners that fill up minor scratches and can be used to pre-wash oxidized paint work

Auto clay bars remove mostly anything but not necessarily everything. There are some types of dusts that don’t come off as easily with clay bar. Moreover they should never be dropped on a dirty floor as that might just render them unusable that’s only because they are sensitive to dirt and because dust will still to your clay that is why most are sold with hardened plastic containers that you should really always use to store your clay bars if you mean to get the mileage you want to from them. There aren’t many cons at using clay bars, that’s why most car detailing shops always use them as the best method of cleaning the car exteriors, it’s a good thing that ordinary person can now buy their own clay an cut costs by detailing their own vehicles.

Source by Greg Chadwick

Chase Auto Finance Charge-Offs Climb 47% in 3Q

Chase Auto Finance’s charge-offs rose to $116 million in the third quarter, up from $79 million the same time the year prior, according to the bank’s earnings call today.

Yet, delinquencies were down. Delinquencies 30 days or more past due dipped to 0.93% of the portfolio in the quarter compared with 1.08% in 3Q16.

The bank’s third-quarter loan and lease outstandings reached $80.8 billion, a year-over-year increase of $5.3 billion. Meanwhile, auto loan and lease originations for the quarter were $8.8 billion, down 5.4% from the same time the year prior.

“While we felt like we got ahead of the issues and tightened early, you’ve seen the industry generally moving in that direction [pulling back],” Marianne Lake, JPMorgan Chase & Co.’s chief financial officer, said on the call. “We have been pressure-tested … and I think the industry and our portfolio performed really quite well.”

Additionally, Chase has not seen a “significant impact” from the Equifax security breach, Lake said. “[We are] under constant attack on the fraud side,” she said. “We have been constantly evolving and refining … and looking at data to better leverage our underwriting decisions.”

The recent Equifax breach revealed that sensitive personal information — including the Social Security numbers of an estimated 145 million consumers, almost half of the U.S. population — were stolen by hackers.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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Canadian Digital Buy-Sell Platform on Track to Hit Revenue Goal

Canada Drives, a digital buy-sell platform based in Vancouver, is on track to reach its revenue goal of about $100 million for the full-year 2017, Founder and co-Chief Executive Cody Green told Auto Finance News.

The platform, which launched in 2010, helps consumers gain access to various products including auto financing, personal loans, and credit-building solutions through the company’s online application. Last year, the company reported more than $50 million in revenue.

“We’ve been amazed by the response so far from Canadians,” Green said. “As an example, [in August] over 60,000 Canadians applied for loans through us.”

Within 24 hours of applying, customers are contacted by a dealership Canada Drives identifies as the best fit for their profile to discuss finance options and vehicle preferences. Therefore, the company works with various banks, credit unions, and independent financial institutions through its network of more than 350 dealer partners.

The platform’s growth is — in part — attributable to its strong focus on marketing. “We spend tens of millions of dollars on advertising every year,” Green said. “The data we collect allows us to be very efficient and effective in finding customers. This also lets us create highly customizable packages, even for smaller market dealerships. Even in a non-major market, a dealership can get 100 customers from their backyard which can have a real impact on their stores’ performance.”

In addition to auto loans, Canada Drives offers various products including personal loans, credit cards, and credit-building solutions for those who may not be able to qualify for a traditional auto loan, Green said. “While we’re popular with consumers with credit issues, really that’s a by-product of our ability to help all consumers with their vehicle financing options,” he added.

Canada Drives has over 350 employees, all located in Vancouver.” We expect to be double our staff in the next two years in Vancouver, in addition to opening international [U.K.] offices,” he added.

For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.

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Pre-Manufactured Slot Car Track Retaining Walls

Much has been written about the compatibility of various brands and types of slot cars working other brands and types of tracks. It is fairly well known, for example, that almost any analog slot car can work well on a Carrera analog track because Carrera has the widest and deepest slot of any of the major manufacturers. Conversely, many Carrera cars will not work well, or at all, on many other brands of track because the guide is too wide or deep to fit in something like a Scalextric track. While articles have been written about the cars compatibility, little has been written about track retaining walls or barriers. This study will look in depth at tracks, retaining walls, and barriers from Carrera, Ninco, and Scalextric, and also show how well they do, or don’t, work when mixing brands.

Firstly, let’s start with Scalextric track and barriers, as they are quite likely the most commonly used brand of commercially manufactured slot car systems. Scalextric makes a very nice looking barrier, made of a soft, pliable plastic that holds its form well, and can absorb impacts of slot car crashes without physical damage. These barriers can attach to Scalextric Sport track in a couple of ways- with small black clips that attach directly to the bottom of the track, or inserted into grooves and channels specifically for these barriers on the accessory shoulder pieces. While the barriers do fit well and fairly stiffly into the black clips, the clips do not remain attached firmly to the track without the use of adhesives or other methods of affixing them in a more permanent fashion to the track. Also with a severe impact, either the barrier, or at times the entire shoulder section may dislodge from the track. Aesthetically the barriers are very pleasing, and they do little damage to the cars while slowing or stopping them. However, they often need to be put back into place after incidents.

Carrera at one time provided two different types of barriers- one was a soft, pliable rubber that would slide into clips and affix to the track, and was available in black or red. These are no longer manufactured. The current Carrera barrier system consists of a red and white striped “candy cane” piece of 3mil PVC that slides into tightly fitting vinyl clips that attach to the bottom of the track. The red and white striping matches the pattern found on the border and shoulder pieces of Carrera track, and does look appropriate on sharp turns, though much less so on straight sections where a barrier may be warranted, such as a bridge. Also, the PVC tends to become brittle over time, and will crack and break with successive impacts. It also has very little pliability, and will pick up paint off of wayward cars. This tends to add a realistic look to the barrier, but the cars will show signs of wear. This system does remain firmly affixed to the track even with severe impacts. The strips of PVC can also be easily cut to custom lengths, and one piece can be as long as 4 feet, allowing for a continuous look and feel on a long turn. It is also quite easy to create your own custom barrier walls by printing directly to sheets of PVC and cutting it into strips of the correct height. This can allow for the creation of realistic and fairly durable trackside advertising.

Though not as widespread as Carrera and Scalextric, Ninco makes outstanding track and barrier products that are almost universally acknowledged as the best quality mass manufactured systems. The track has almost the same width and depth as the Carrera, while having the flexibility and aesthetics of the Scalextric. The barriers include low walls, stone looking walls, and even a wall with a high fence. The Ninco barriers are of a similar material to the Scalextric ones, and absorb impact without “trading paint”

Now, suppose you have one brand of track, but you would like to use another brand for a wall or barrier. Fortunately, this is not nearly as complex or difficult a compatibility issue as it is with the cars. The height of the Carrera PVC strips is exactly the same as the height between the top and bottom rails of the Scalextric barrier railings, and it is quite easy to remove the Carrera candy-cane strips and replace them with Scalextric guardrails. The Carrera fastening system to the Carrera track is very secure, and the railings stay in place as well or better using the Carrera clips on Carrera track as they do using Scalextric clips on Scalextric track. Lengths may be a minor problem, but the material trims easily with a utility knife. Unfortunately, if you wish to use the Carrera “candy cane” on the Scalextric track, the only way to do it well is with an adhesive, laying the Carrera strips over the Scalextric guard rails. Hot glue works well for this, and can be removed fairly easily as well.

The Ninco barriers and walls are a one piece system, with the clips being a part of the wall or barrier section. These attach with ease to not only the Ninco track, but also the Carrera and Scalextric. In fact, the Ninco products seem to mount even more snugly with the Scalextric track than on their native track. On the Carrera track, the height of the track is just slightly taller than the space between the top and bottom of the Ninco clips. However, it can be made to fit by trimming the edge of the Carrera track very slightly, almost unnoticeably along the bottom. Again, the Carrera candy cane can be affixed to the Ninco barriers through the use of adhesives.

Pictures of these various combinations, adaptations, and creations can be seen on our website,

Source by Warren Peck