Brite Financial, the subprime used-vehicle leasing arm of CARite dealerships, is on pace for a record year of originations, Chief Operating Officer Mike Cavanaugh told Auto Finance News.
With 2,624 contracts originated year to date, the financial arm has already surpassed full-year 2016 originations. Last year, the company originated 2,491 contracts, and this year it’s projecting 4,400 by yearend.
Brite Financial’s leasing program is unusual in the industry, he said, adding that it helps limit the impact negative equity has on subprime consumers.
“In a typical subprime retail deal … [consumers] are not in a situation where they can trade out of that vehicle with any equity, and in most cases there is negative equity pretty deep into the loan,” he said. “We can allow a customer to really pay for the portion of the vehicle that they are using for the amount of time they are using it, and then get out of that vehicle without penalty to them.”
The lender leases 3- to 4-year-old vehicles on 36- to 48-month terms but allows consumers to swap vehicles after two years. If the borrower, for example, has children in that two-year period, this option allows them to upgrade into a larger, newer vehicle that fits their lifestyle with “minimal money out of pocket,” Cavanaugh said.
Madison Heights, Mich.-based Brite Financial finances 30% to 40% of total sales across CARite’s 24 dealerships in nine states. The rest of the retail loan volume is financed by other lenders, including Westlake Financial Services Inc., which became the dealer network’s preferred subprime lender this week.
