Braeger Auto Finance, a Milwaukee-based specialty auto finance company, plans to offer credit cards to subprime consumers at buy-here, pay-here dealerships, Chief Executive David Braeger told AFN.
“I am going to be adding credit card servicing because almost all of the buy-here, pay-here and subprime dealers’ websites now provide credit card payment,” Braeger said. The credit card pay-ments would be at a lower interest rate than the auto loan, and that’s “part of the attractive feature,” he added.
For instance, if a consumer is approved for an auto loan at 18% interest, he can then apply for a credit card which might have a 10% interest rate. The customer can then use the credit card to make a larger down payment, at that lower interest rate.
“We tie the ‘down payment card,’ for lack of a better term, into the pay-ment of the vehicle. So the benefit to the dealer is a larger down payment, protection, and profit,” Braeger said. “The consumer gets in the vehicle at a lower interest rate, and obviously we get a nice rate of return.”
Braeger hopes to add credit cards to the company’s services sometime in 2016, he said. Separately, Braeger Auto extends credit facility financing for dealerships that can-not get traditional bank financing. The company currently funds credit facilities for 16 rooftops and has $16 million outstanding