MIAMI — World Omni Financial has started to include loans with 78-month original terms in its nonprime securitizations, Bryan Romano, assistant treasurer at JM Family Enterprises, told Auto Finance News at ABS East. JM Family Enterprises is the parent company of World Omni Financial and Southeast Toyota Distributors.
Within the $744 million pool, 10% of the assets are backed by loans for new Toyota vehicles with original terms of 78 months. Those longer-term loans increase the weighted average FICO score for the securitization, Romano said.
“We only offer [those extended loan terms] to the highest credit quality customers — 720-plus FICO,” Romano said. “As a result, for the 10% of this transaction, the weighted-average FICO is 760. That blends with the lower-quality [loans] — the below-650 FICO and the non-Toyota used vehicles that are also in the trade. So, in aggregate, the weighted average FICO is up quite a bit.” The pool’s weighted-average FICO is 634, according to a presale report by S&P Global.
World Omni Financial started originating 78-month term loans in May, said Eric Gebhard, treasurer at JM Family Enterprises. “I would describe [the longer-term limit] as a desire to not have that business go to a bank, who’s going to offer an 84-month [term],” he said, adding that the program was designed to help with customer retention.
“Just the existence of this [securitization program] is unique and special,” Gebhard said. “If you think of the nonprime space, you will not see any issuance from a captive — they’re all prime. If you look at our portfolio, what you’ll see — even though its nonprime, it’s a largely Toyota book. Our expectation is that a new Toyota financed to a 650 [FICO] customer is going to do better than a used pick-your-manufacturer-vehicle to that same customer.”
World Omni Financial is the captive finance company for 177 Toyota dealers in a five-state footprint of Alabama, Florida, Georgia, North Carolina and South Carolina. As of June 30, World Omni managed an $11 billion portfolio, up 4.7% year over year, according to S&P Global. Total delinquencies as a percentage of receivables were 2%, and repossessions as an average number of contracts was 1.9%.
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