Westlake Financial Service’s partnership with the online and brick-and-mortar dealership group CARite began with a message on LinkedIn.
“We were evaluating which lenders we do business with and where we saw some gaps in terms of who can approve what kinds of deals,” Mike Cavanaugh, chief operating officer for CARite, told Auto Finance News. “I heard some positive feedback from our store leaders who had worked with Westlake previously at other stores, so I reached out to Ian Anderson, Westlake’s president, on LinkedIn and said, ‘Hey I think our models might have some synergy here, why don’t we look at having a partnership on a larger basis?’”
CARite already had a few lenders on its platform, including Ally Financial Inc., Capital One Auto Finance, Exeter Financial Corp., and Huntington Auto Finance, however, the dealer still wasn’t getting the kind of subprime volume it historically catered to, Cavanaugh said.
“We were able to come up with a custom program for CARite that’s helped us continue to grow our business with Westlake,” he said. “We’ve noticed on the subprime and near-prime front, we’ve had some pretty profitable deals that we likely wouldn’t have had otherwise.”
Capital One still provides some subprime volume for the group as well, but the bank tends to skew more near-prime, he added. CARite still has a great relationship with Capital One, particularly with Capital One’s Diamond Dealer program, “where the more business you do the more aggressive they get,” Cavanaugh said, meaning the more volume dealers provide Capital One the more open the bank is to subprime loans.
Westlake, on the other hand, is able to service “unique” aspects of CARite’s business model, he said, such as floorplan arrangements with some of CARite’s non-corporate owned dealer partners — which aren’t franchise dealers but act a lot like it, Cavanaugh explained. The arrangement offers a rewards-like program in which the more retail volume the dealers do, the lower their interest rate falls on the floorplan deal.
“We have a one-price model; we typically don’t mark up our cars a lot, and especially in the subprime world it’s a more conservative pricing model,” Cavanaugh said. “From a lender’s perspective, we have a less risky model than probably the typical dealer, especially the typical independent dealer … Westlake has had a more diligent approach to really coming up with a custom model for us,” whereas other lenders have good but “pretty standard” models, he added.