Excellence in auto finance: Achievements amid a pandemic

Auto lenders have proved their resiliency after facing unprecedented challenges in recent months. Despite a dip in new- and used-vehicle sales and continued inventory woes, the industry rebounded far more quickly than executives first expected when the COVID-19 pandemic reached the U.S. in April.

The Auto Finance News team highlighted above-and-beyond efforts with the 16th annual Auto Finance Excellence Awards, presented as part of the 2020 virtual Auto Finance Summit.

Bank of America supports financing for accessible vehicles 

Bank of America is funneling mobility vehicle financing opportunities into the banking world with its specialty finance program for wheelchair-accessible vehicles, which offers auto lending to customers with disabilities and access needs.

Since Bank of America established the program two years ago, the lender has beefed up its accessible vehicle financing portfolio by more than 1,000%, generating more than $27 million in originations.

“Bank of America is a highly experienced lender for wheelchair-accessible vehicle financing,” said Duane Freeman, national sales executive, consumer vehicle lending at the bank. “We provide an innovative approach from underwriting to financing with both chassis and conversion packages, while providing competitive interest rates with no application fees across a national lending footprint.”

Bank of America was presented with this year’s Auto Finance Excellence Award in community service in recognition of the bank’s efforts. The award spotlights the Charlotte, N.C.-based bank’s contribution to its communities and clients with disability access needs.

Fabien Thierry, the bank’s consumer and small business vehicle lending executive, accepted the honor during the Auto Finance Excellence Awards on Oct. 21, acknowledging Bank of America’s long-term commitments to its clients. “Something that we demonstrated throughout 2020 is our clients and community need us now more than ever,” Thierry said.

The disabled community is often underserved by the auto industry. Households that include people with disabilities are less likely to have an auto loan than households without, and at least one in five households of those with disabilities had an unmet need for credit to apply for a personal loan, according to a 2017 National Disability Institute (NDI) study.

The cost to upgrade a vehicle to meet mobility standards or purchase a modified vehicle can run between $20,000 to $80,000, according to the National Highway Traffic Safety Administration.

To be fair, financing alternatives do exist for individuals with disabilities to receive funding for modified vehicles, said Cindy Miller, of the Center for Disability Rights in West Haven, Conn.

Although she was able to purchase her vehicle in cash through Advanced Wheels — a Conn.-based wheelchair van dealer — the dealership recommended Miller go through the Bureau of Rehabilitation Services for future financing.

Financing vehicles for disabled individuals comes with a heightened risk for lenders, making it more difficult for those individuals to access a loan. If a disabled borrower defaults on their loan and the vehicle is repossessed, their Social Security Disability income cannot be garnished to pay the creditor, according to Klein Law Group.

“We have broad access to key players in the wheelchair accessible vehicle market, providing lending to national chain retailers as well as a leading van conversion manufacturer and retailer,” according to Bank of America’s Freeman.

The lender has been collaborating with NDI since December 2019 to enhance the experiences for its clients with disabilities by integrating financial education and free tax preparation into its customer service.

“The importance of integrating financial capability strategies into human and social service delivery systems has been a key part of our collaboration and together we will continue this effort,” said NDI Executive Director Michael Morris.

On a broader scale, Bank of America has also rallied to bolster the
Paycheck Protection Program, distributing over $25 billion in funding to clients, according to Thierry. Government PPP distributions are widely credited for helping to keep unemployment levels down.

“We have also played a leading role in the Paycheck Protection Program by processing over 334,000 loans, which helped approximately 25% more small businesses than any other competitor and was roughly equal to half the total loans provided by the top 10 banks combined,” said Freeman, noting that 99% of the dispersed loans went to companies with 100 employees or less, and 92% went to companies with annual revenue of under $5 million.

Bank of America recently also garnered praise for its four-year commitment to circulate $1 billion throughout global communities to advance racial equality. The lender announced the initiative in early September and has committed to distribute one-third of its long-term plan — approximately $300 million — in the near future.

Bank of America is the eighth-largest bank in the world and its auto lender arm, Bank of America Dealer Financial Services, ranks 11th in total outstandings, according to Big Wheels Auto Finance Data Report.

Technology spurs growth for Vroom

The COVID-19 pandemic paved a smooth road to success for online car retailers as dealerships closed and car sales moved digital. Online used-car retailer Vroom capitalized on the opportunity by enhancing its technology stack to address security and improvement needs and integrate financing into its digital car sales workflow.

The company has added more than 40 technology elements to its digital platform since the start of the pandemic, according to BuiltWith, which tracks technology adoption data.

Vroom’s commitment to tech improvements and prioritizing digital financing amid trying circumstances has earned the company a 2020 Auto Finance Excellence Award for technology. Vroom also announced earlier this month a two-year extension of its $450 million floorplan financing agreement with Ally Financial, representing a “vote of confidence” for the company’s online model, said Dave Jones, Vroom’s chief financial officer.

“Vroom has made great strides this year and we’re excited to extend our financing relationship to continue supporting the company’s inventory acquisition efforts and growth strategy,” said Doug Timmerman, president of auto finance for Ally.

Vroom’s lending partners also include Chase Auto, with which it has a private label financing partnership called Vroom Financial Services powered by Chase, Capital One Auto Finance, Santander Consumer USA and TD Auto Finance.

In May, Vroom also added the ability to show inventory not yet available just as the industry faces squeezed used-vehicle supply.

The retailer has set its sights on reinventing all phases of the car buying process, from discovery to delivery, Mark Roszkowski, chief revenue officer, said during the awards presentation.

Customers can use Vroom’s website to search and select a vehicle from more than 3,000 options across 400-plus makes and models, apply for financing, estimate trade-in value, finalize purchase and have the vehicle delivered to their home or a convenient location.

“We’re trying to transform the automotive industry by offering a better way to sell and a better way to buy used vehicles, including digitizing the financing process,” Roszkowski said. “It’s been a long and winding journey to bring the functionality to where we have it today, and we’ve got a lot more to go.”

Vroom has been well-positioned throughout the pandemic, evidenced by the company’s 74.1% year-over-year growth in e-commerce units sold in the second quarter, according to the 2Q earnings report.

Vroom’s number of units sold through e-commerce grew to 6,713 units from 3,856 units compared with the same reporting period in 2019. The average monthly unique visitors to Vroom’s website also increased 59.1% to 999,899.

E-commerce sales helped offset dips caused by retail store closures amid the pandemic, with online sales increasing despite an 8% YoY decline in the total number of cars sold to 11,082 units.

“We’re proud to offer a buying and selling solution to our customers that they can take advantage of from the comfort of their homes,” Roszkowski added. “We look forward to continuing to push the automotive industry and the finance industry forward through this unprecedented time, and beyond.”

Westlake presses ahead amid COVID

While many auto lenders were focusing on maintaining smooth operations during the COVID-19 pandemic, Westlake Financial enhanced its operations by launching new programs and expanding on partnerships.

The full-spectrum lender, which was ranked by Big Wheels data the 27th-largest auto finance company last year, launched a lending program in May to finance commercial vehicles in eight U.S. markets — Georgia, Kansas, Maryland, Maine, Mississippi, New Jersey, Ohio and Virginia.

Maximum financing amounts range from $25,000 to $65,000, depending on the vehicle type, with terms ranging from 36 to 72 months depending on vehicle mileage, according to Westlake. Dealers are able to submit applications through DealerCenter, DealerTrack, RouteOne or CUDL.

Westlake improved multiple operations while also moving 2,300 employees to remote working during the pandemic, earning the financier a 2020 Auto Finance Excellence award for operations. Part of the company’s success was in the leadership’s willingness to help with servicing calls.

“We were able to get everyone operational from home equipment. At the time, we really didn’t know what the next day was going to be, but the great people that I work with really kept it all together,” Westlake Group President Ian Anderson said during the awards ceremony.

In August, Westlake also looked to decrease funding processing times and minimize fraud incidents through a partnership with TurboPass, an income and asset validation tool. Dealers use the platform to send text messages to consumers to verify stipulations for funding, such as proof of residence, income, trade-in or lien verification.

“When you’re dealing in subprime, proof-of-person … outside of a credit report are key to getting a deal through,” Anderson told Auto Finance News in August. “The pain point is that gathering all this paperwork at the dealership level takes time.”

California-based Westlake also expanded its auto leasing program in September, allowing the lender to offer leasing in markets not currently covered by Credit Union Leasing of America, which Westlake purchased in 2017. CULA holds more than 85,000 prime leases. Westlake now allows Toyota, Honda and Jeep dealers in its network to offer leases to prime and super-prime customers on new vehicles in California and Arizona, and plans to expand into additional markets. Dealers in the program can submit lease applications through the F&I digital service platform RouteOne.

The pandemic, while challenging, has provided Westlake an opportunity to review its operations, Anderson said. “We used this time to really work with our partners, and the use of technology really enhanced what we were doing,” he noted.

Westlake Financial Services has $10.7 billion in consumer loans outstanding, according to Big Wheels Auto Finance Data.