Direct Volume Surpasses Indirect at Turner Acceptance

Turner Acceptance Corp.’s 2016 direct auto portfolio surpassed its indirect portfolio in volume, Andres Huertas, director of lending and marketing, told AFN.

The company didn’t so much as move away from indirect, but it decided to be more “prudent” with its lending practices, where others chose to get more aggressive, Huertas said.

“Moving forward, [we are] trying to translate some of the successes we have in the direct model to the indirect model and also have some integration with it to do more marketing and more mobile marketing,” he said.

When Huertas joined the company 15 years ago, direct lending comprised 15% of Turner’s overall portfolio, but last year it grew to 55%.

Loss rates continue to be more favorable through direct, to the point where some unsecured direct loans perform better than traditional indirect loans, he said, and consumers are more likely to pay when they have a relationship with their lender.

“The concept of the finance company is very absent from the [indirect] consumer. With a direct transaction you have our office explaining the terms, going back and forth — that relationship is not abstract anymore,” Huertas said. “They are more enticed to pay, because they know someone has helped them out to get the car they want.”

When he took over direct in 2012, everyone told him the model wouldn’t work, but there is a sense of vindication now thanks to its latest success.

“Some lenders have taken the direct model very seriously, but not all of them have been very successful with it,” he said. “You have to recognize it’s a totally different product.”