Automotive News - December 1, 2008 - (Page 20) 20 • DECEMBER 1, 2008 INSIGHT SUBPRIME believe in the people, and we go to bat for them, then (the lenders) will let some of them through. now,” he says. John Hawkins, president of Great Metro Autogroup in suburban Los Angeles, suggests that dealers learn as much as they can about creditchallenged customers. That makes it easier to sell the deal to the lender. Maybe the customer’s home was repossessed, but he still has a good job, Hawkins says. Or he just went through a divorce. But he is still making payments on other loans, making him a better credit risk. “If we really believe in the people, and we go to bat for them, then (the lenders) will let some of them through,” Hawkins says. “ If we really Loans have become more expensive continued from Page 17 JOHN HAWKINS Great Metro Autogroup ” LINDA FORD More expensive A CUDL conversation with the owner of what may be the nation’s fastest growing dealership group — the $1.4 billion Ken Garff Automotive Group of Salt Lake City, Utah. ROBERT GARFF ON THE SPGT: Loans to subprime customers have become more expensive. AmeriCredit has increased its interest rate on loans to subprime customers by one to two percentage points, says Caitlin DeYoung, the lender’s vice president of investor relations. AmeriCredit, of Fort Deal structure AT A GLANCE: With a last name that has been in the automotive business for over 75 years, Robert talks about expanding ON THE SPOT: We know your father, Ken Garff, started this business in 1932. When did you start? GARFF: I started at age 13, sweeping floors in our body shop. By the time I was 16, I was a salesman in one of our used car operations. I learned the business from the ground up. ON THE SPOT: What do you contribute to your family’s success? GARFF: Garff’s never, never give up. You know that speaks to longevity, that speaks to doing things right. That means stick-to-itness. ON THE SPOT: How involved are you with the communities you serve? GARFF: One of the main ingredients of our success is that we play an active part in the community. As much as 20 to 30 percent of our lives are spent giving back to the communities we serve. ON THE SPOT: How do you feel about CUDL in terms of what it’s done for you? GARFF: The main thing about CUDL is that it provides us with a is what really drives the ability of a customer without a good credit score to buy a car in today’s market, industry experts say. Shorterterm loans and larger down payments are key. Worth, Texas, specializes in lending to customers with credit scores ranging from 500 to 700. AmeriCredit also has raised its minimum credit scores in some areas and tightened its loan-to-value levels, DeYoung says. So, about a year ago AmeriCredit would have lent 120 percent of the wholesale value. That has fallen to less than 110 percent, DeYoung says, meaning larger down payments for borrowers. Deal structure is what really drives the ability of a customer without a good credit score to buy a car in today’s market, industry experts say. Shorter-term loans and larger down payments are key. A typical subprime customer, with a score of 580 or below, will need to put down at least 20 percent, says Toprak of Edmunds.com. “The higher the down payment, the better the chance of approval,” he says. into the West, staying connected with the communities they serve and his top priority — family. This avid horseback rider, who still enjoys a good “round up”, also elaborates on how CUDL is responsible for 15 percent of his auto loans. different avenue of buyers. It’s another opportunity to get in front of another group of customers. ON THE SPOT: How many of your buyers go through the CUDL system? GARFF: Approximately 15 percent. And that’s 15 percent of buyers that maybe we wouldn’t have otherwise. ON THE SPOT: How do feel about AutoSMART and being able to showcase your inventory online? GARFF: For us, it’s another way of having a storefront. I think in the fourth quarter alone, our organization attracted 967 buyers from CUDL’s AutoSMART system. ON THE SPOT: CUDL did $12 billion in auto loans in 2007. What does that mean to you? GARFF: Well, it means that they’re one of the major players in the auto finance arena. G *Interview conducted February 2008. “I think in the fourth quarter alone, our organization attracted 967 buyers from CUDL’s AutoSMART system.” Log onto www.CUDL.com/robert to read the entire interview. More hands-on It’s another On the Spot interview brought to you by 877.744.2835 www.cudl.com FAST, FRIENDLY CREDIT UNION FINANCING A good relationship with lenders is also crucial to getting subprime customers financed in these tough times. “It’s back to the old days, where see SUBPRIME, Page 22 http://www.Edmunds.com http://www.CUDL.com/robert http://www.cudl.com http://www.cudl.com
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