Lobel Steers Clear of Extended Loan Terms

LAS VEGAS — Many lenders, including some in the subprime space, continue to push extended loan terms as long as 84 or 96 months, but Sheila Tedesco, remarketing manager at Lobel Financial, had one response to that, “No, no, no.”

Anaheim, Calif.-based Lobel specializes in subprime financing for older model vehicles, and ensures that loans terms enable consumers to get “in and out” of a vehicle, she said. On terms, Lobel will go as short as 12 months and as long as 60 months, but the ideal spot is 48 months, she said.

“We just financed a 2000 Chevy Silverado, and I don’t want to give that customer a five-year loan, that car is not going to make it five years,” Tedesco told Auto Finance News during the Conference of Automotive Remarketing last week. “[We focus on] what’s the most affordable payment to the buyer and the shortest term we can do.”

With the average new-vehicle price more than $35,000, Tedesco said new-vehicle lenders have to extend loan terms “because who could afford them [otherwise]?”

But even used vehicle prices are rising, said Sandy Schwartz, president of Cox Automotive, during a keynote address at the conference.

“The average price of a pre-owned car is about $20,000,” he said. “Since 2015 — and this has gone unsung — household income has not gone up significantly.”

Given that 3 million off-lease vehicles are expected to enter the market in 2017 according to Schwartz, shorter loan terms could also help Lobel Financial from getting stuck with an asset that may depreciate quickly due to the increased volume, which is why the company sticks to older vehicles at shorter terms, Tedesco said.