It allows a dealer to focus on selling vehicles; not on collecting payments.
Oftentimes dealers are very good at selling, but lack the experience to collect their accounts effectively. Sometimes it is just a factor of growth, too many accounts to collect on for your staff. Companies like United Acceptance have more experience in collecting accounts, knowing what they can and can’t do legally in many states. Dealers selling their aged notes often see a better yield than if they collected the accounts, especially when you factor in the cost of man-power for collection efforts.
Reporting customer credit to the bureaus
Some dealers think this is a benefit; others would disagree. Regardless of which side of the fence you are on, it is a benefit for the customer so there is some value to the dealer that has the availability to provide this service to his best customers. For a small dealer reporting direct is just too much of a hassle. By selling your notes to a company that provides that service, you have an added customer benefit that your competition may not be able to provide.
What would a company like United review in evaluating your portfolio for sale?
- Aging – Notes that are 90+ days are optimal, with a 36-month term remaining.
- Sold at fair price with legal interest rates
- Value of the vehicle compared to the outstanding note is reasonable
Notes are evaluated on a deal-by-deal basis. Dealers tend to be very skeptical the first time through the process, but once they have completed one cycle they are very likely to do it again and again.
Vol 2, Issue 10