U Drive Acceptance Corp. is transitioning into a fully indirect auto lender, from a buy-here, pay-here dealership, said Neil Evans, the company’s director of originations.
The company “took birth” in a back office of Big Deal Auto Plaza, but will move into its own office next month, Chief Financial Officer Jeremy Bennett told AFN.
“We went from applications coming in from one location [Big Deal Auto Plaza] to being able to take applications from, essentially, any dealership that we want — so long as we are able to do business in that state,” Bennett said.
The supply of applications has “gone through the roof,” Bennett said. “We are able to cherry pick exactly type of customers and collateral that we want, and it really helps create a portfolio that is 10 times stronger than the BHPH portfolio we originally had.”
Sioux City, Iowa-based U Drive began the trek to becoming an indirect lender in 2014. Since then, its BHPH volume has declined — to 71 loans year-to-date, from 280 in 2014 — while its indirect volume has climbed — to 185 loans year-to-date, from 75 indirect loans in 2014. By yearend, Bennett expects U Drive to originate 250 indirect loans.
“We are trying to get the dealership set up to do business as regular dealership, not just a BHPH car lot,” he said. “At same time, we were setting up [U Drive Acceptance] to operate as a finance company and not just a BHPH-related finance company.”
The lender operates in Iowa, South Dakota, Minnesota, and Missouri. It originates loans for more than 70 dealers.