As Chase Auto Finance is phased in as the replacement lender for Mazda American Credit, dealers worry that used-car and first-time buyers may face limited — or more expensive — financing options.
On Oct. 1, Ford Motor Credit Co. ceded its position as the provider of financing for Mazda Motor Corp. car buyers. Instead, dealers may submit loan and lease applications to Garden City, N.Y.-based Chase Auto.
“We will offer full-service financing” for Mazda’s 665 dealers nationwide, said Mary Kay Bean, a spokeswoman for Chase Auto. Specifically, the financier will offer prime, near-prime, and subprime loans; leases; floorplan and commercial loans; treasury and personal banking services; and GAP, extended warranties, and dealer marketing programs.
Still, Mazda dealers worry that some car buyers will now have to pay more for financing. “It will make a big difference in used-car lending,” said Cyndee Sherrick, finance manager at Tustin Mazda.
The difference stems from the fact that MAC uses Kelley Blue Book for its used-car values, while Chase uses Black Book. “There’s a couple thousand dollars difference in value” between the two, said Jane Shek, finance manager at West Covina Lincoln Mercury Mazda. “It will make customers put more money down — an extra couple thousand dollars.”
Dealers also worry that Mazda American Credit’s longstanding first-time buyer program might disappear when Chase takes over financing. MAC has historically offered special financing rebates and incentives — like $500 bonus cash — to college graduates.
For now, though, specific offerings have yet to be hammered out completely. “I know they went back to the drawing board on some of their programs,” Sherrick said. “They haven’t made any promises either way. They are trying to make it a smooth transition.”
No matter what the changes, dealers will have to get used to the new process and financing provider. “I’m sure a lot of things will change as far as structures and the way they buy deals,” said Steve Trapasso, finance manager at Chapman Mazda, in Phoenix.
One thing is firm, though: “The programs will still be Mazda-promoted and generated,” said Mark Tyza, finance manager at Ferndale Mazda and a Mazda dealer for he past 15 years. The Michigan dealership funds 95% of its business with MAC.
IN CHASE’S CORNER
For dealers who already use Chase for financing, the new arrangement is a positive.
“It’s a great thing for us,” said Michael Appling, finance manager at Mazda of Clear Lake. “We do our corporate checking with Chase, and we have all new cars floorplanned through Chase. It may help give us more buying power with the bank.”
Chase is Chapman Mazda’s primary bank, as well, said Trapasso, who is “happy” about the partnership. “We use Chase quite a bit on the retail prime side,” he said.
No matter how things shape up, “there will be a learning curve,” said Nick Borrelli, finance manager at Alhambra Mazda.
For some dealers, the finance relationship with Chase will mean securing a new floorplan provider. “We have to change our flooring lines with Ford,” Borrelli said. “We have 21 days to let them know who [the new provider] is, and we have to pay it off by the end of the year.”
A Mazda spokeswoman failed to return a call by press time to elaborate on the floorplan finance.