Demographic data has helped Lobel Financial hone in on reliable consumers, said Sheila Tedesco, the company’s remarketing manager.
For example, Lobel’s data showed that it could go lower down the credit spectrum in certain communities like the Central Valley of California, because having a vehicle is particularly vital to farmers in the area.
“We have this footprint of what this buyer has done in the Central Valley, because that’s where the farming is,” Tedesco said. “You go to New York and there is no farming, so they won’t be there, but there are no bankers in the Central Valley either.”
By looking at city demographics, the lender has had success with loans that would have normally been considered “too risky,” she said.
“Certainly you can’t discriminate, it’s not about discrimination of the purchase, it’s about the performance of what that buyer is going to do,” she said. “There’s a tremendous hispanic and Indian [population] and we know that they co-habitate, they are loyal, and they pay their loans — and we can see that in our data.”
The company stays short on its loan terms — going as low as 12 months — to lower the risk on its portfolio, and that strategy intersects with it demographic data when lending to millennials, Tedesco explained.
Millennials tend to change jobs more frequently than their baby boomer or gen X peers, so it’s hard to underwrite them on a seven-year loan when they could have another job every two years, she said.
“People back in the day got one job, two jobs, they were loyal to that company and they retired from it because that’s what their grandfather did — that was the mentality,” Tedesco said. “Currently, millennials have more of a short-term, social-media, instant-gratification thinking. They are going to tire of that car [before the terms is over].”
