DALLAS – EFG Companies, the company behind the award-winning Hyundai Assurance program, announced today it has forged a strategic partnership with Auto Financial Group to increase market share for its DrivingSense program, a post-recession consumer finance product.
DrivingSense is a residual based, walkaway, balloon loan program that provides consumers with a more friendly financing option, requiring no down payment and offering lower monthly payments. Currently, residual-based financing accounts for almost 30 percent of the new-vehicle market.
While consumers look to their financial institutions for the best rates on conventional loans, they frequently choose captives or other competitors for residual-based financing options, company officials noted. With DrivingSense, financial institutions are now positioned to recapture those consumers’ loans by providing a credible, residual-based financing option from a source they trust.
“Lenders and dealerships are hungry for new financing programs that increase sales and loan volume by directly addressing the consumer needs,” said Stephen Roennau, vice president of EFG Companies’ Transcend Group. “With that in mind, DrivingSense is primed to tip the market.”
To understand DrivingSense, consider the difference between balloon financing and leasing. With balloon financing, consumers can make a very low down payment or have no down payment at all. They get the vehicle’s title in their name and agree to make small monthly payments over the term of the loan. The last payment, known as the balloon or residual, is one large payment at the end of the term that pays off the loan.
Consumers typically have three options prior to loan maturity and at loan maturity: trade in the vehicle (i.e. sell it and use the vehicles end-of-term value to pay off the loan), refinance the vehicle or pay it off and keep it.
DrivingSense provides the same protection to the consumer as a lease with the guaranteed future value, but the vehicle is titled in the consumer’s name — giving them the tax benefits of balloon financing. DrivingSense also has lower fees than traditional leasing and lower costs for excess mileage.
“We approached EFG not only because of their demonstrated success in implementing distinctive market-differentiation programs and customized training, but also because of their strong engagement model,” said Richard Epley, CEO of Auto Financial Group. “EFG understands how to successfully position game-changing products and penetrate the market aggressively.”
AFG is partnering with EFG to provide ongoing training for their lenders and their indirect dealership clients to increase their market share in residual-based lending with DrivivingSense. EFG is developing a behaviorally-based, guided-discovery training curriculum for market implementation. The hands-on training includes how to present the DrivingSense option to consumers and how to quote payments using AFG’s user-friendly customized web-based CarBuilder calculator.
DrivingSense is available on both new and pre-owned vehicles up to four years old, offering mileage terms of 12,000, 15,000 and 18,000, and finance terms of 24-72 months.