CPS Eyes Pass-Through Agreements to Bolster 2019 Originations

An existing pass-through agreement and a couple others in the works should help propel Consumer Portfolio Services’ originations 20% higher this year, to about $1 billion, Chief Executive Charles Bradley Jr. told Auto Finance News.

CPS has “been working with some banks to see extra flow,” Bradley said, though he declined to name the banks. Already in the fourth quarter of 2018, 20% of CPS’s 32% origination growth stemmed from bank pass-through programs — deals the other lenders couldn’t or wouldn’t buy.

Typically, a prime lender that funnels loans to a nonprime or subprime partner requires that a high percentage of the loans be financed. CPS’s current alliance, however, includes no such mandate and, so far, the capture rate — or the amount of deals CPS buys from the bank — has been small.

Also read: ‘Unseasonal’ 4Q Origination Boost Puts CPS on Track for Growth in 2019

“They’re still sending us stuff we don’t want,” Bradley said, adding that high-balance, $50,000 loans is one segment CPS continues to turn down. CPS inked its bank pass-through agreement in June 2018, and it took through yearend to finalize integration and get a handle on the loans it would buy, Bradley said.

CPS is in talks with “two or three more” lenders, not all of which are banks, he added, indicating that they might be captives.

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