A Westlake Financial Services executive said last week that the company has plans to launch a subprime, used-vehicle leasing program potentially before yearend.
Earlier this month, the lender acquired Credit Union Leasing of America (CULA), which originates lease contracts through its technology, but leaves the servicing and money factor for the credit union. Westlake Group President Ian Anderson told Auto Finance News that through the acquisition, Westlake will gain knowledge about the leasing business and, therefore, offer an used-leasing product that will target subprime and near-prime consumers. The program will target that market so as to not cannibalize CULA’s more prime consumer base.
“We don’t [currently] have anything on the side of leasing,” Anderson said. “Rather than starting a leasing program ourselves, CULA is a great way to jumpstart into leasing, acquire a great company that deals with credit unions, and also further strengthen our relationship with credit unions.”
Westlake would focus on one- to three-year-old vehicles for the program, because many such vehicles will be coming off lease over the next few years, he said. The subprime lender can offer used-vehicle leases at $40 to $50 less per month than traditional used-vehicle retail contracts, and consumers will also benefit from lower down payments on leases versus retail contracts, he added. “For subprime folks, that’s a substantial amount of savings,” he said.
Both lenders are on the online originations platform CU Direct, where CULA services new-vehicle leases and Westlake takes turndowns that could not strike a deal with a credit union. Anderson hopes this acquisition will strengthen the company’s relationship with credit unions.
CULA is on pace to originate 2,863 lease contracts this month for $102 million, that’s up from $94.3 million in May, Anderson said. The acquisition also brought $1.5 billion in lease outstandings into Westlake’s fold, according to the initial press release.
While there are no plans for Westlake to do new-vehicle leases at this time, “I wouldn’t count us out” in the long term, Anderson said.
