Westlake Financial Services will start originating loans in Canada in the first quarter of 2020 via a newly inked deal with Axis Auto Finance, Ian Anderson, group president of Westlake, told Auto Finance News.
Axis will originate and service the loans for a fee, and Westlake will retain the loans on its balance sheet, Anderson explained. Westlake will leverage its “lower cost of funds” to enable Axis to move further up the credit spectrum, he said. “Currently, [Axis’s] credit scope is 580 and lower, and [the partnership] gives Axis the ability to go up to 700,” Anderson said.
As the partnership commences, Westlake is eyeing “larger investments” in Axis based on how well the loans perform, Anderson said. For now, Westlake is investing in Axis on a private-placement basis — meaning that investments are made via a small number of select investors.
“Instead of building a full loan operation in Canada where we’d have to have licensing, staff, understand collection laws, etc., Axis already has that in place, so [the partnership] gives us the ability to understand the Canadian market by having those assets on our balance sheet and see how it performs,” Anderson said. “Over time, if it makes sense, we can make a larger investment.”
The Hankey Group, Westlake’s parent company, will integrate subsidiary Nowcom Corp.’s dealer management system DealerCenter and online car-buying marketplace Carzing into Axis, making the technologies available to Axis’s auto dealers and consumers.
Westlake is no stranger to strategic partnerships. The lender owns 5% of Clearwater, Fla.-based Nicholas Financial; it also owns Western Funding and Credit Union Leasing of America. “Westlake is more of a holding company that provides technology and financing for other companies out there,” Anderson said.