AUTOMOBILE NOTE

"Gold Leaf Capital represents multiple institutional funding sources that work with dealers to arrange point-of-sale funding.  This allows the dealer to offer financing to its customers without having to secure its own bank lines of credit."

Selling off auto loans can benefit auto dealerships by providing immediate cash without bank financing, which the dealership can then use to purchase more inventory or open another location. 

Selling off auto loans frees the dealership from the risk of NON PAYMENT from credit customers.

Placing auto loans with a funding source at the point-of-sale allows dealership to offer better credit terms to customers without securing a bank line of credit, this in turn increases the potential customer base.

What type of auto dealership can quality for "auto notes".  Dealerships that qualify:

• Demonstrate stability
• Adhere to consistent underwriting guidelines
• Generate 25 or more loans per month
• Have high loan dollar volume
• Understand the sub-prime auto business
• Market dependable used cars
• Have programs to help customers keep their cars running
• Can produce a completely and accurately documented loan package

PRICING

The amount of funding source discounts the portfolio depends on the age of the loans, the quality of the loans, the interest rate, the value of the vehicle, the underwriting criteria, historical loan defaults, and other factors.

If underwriting criteria and documentation are consistent and complete and loan performance is current, the seller can expect to receive 90 cents or more on the dollar for the portfolio.  For most loan portfolios, the seller can expect to receive 65 to 80 cents on the dollar

BROKER FEE STRUCTURE

Fees for automobile loan portfolios are generally paid by the seller and range from 1 to 5 percent of the funds the seller receives (or the purchase price).

FREQUENTLY ASKED QUESTIONS:

Q:        What is the portfolio size or annual loan volume?

A:        Ideal portfolios should be $500,000 or higher or annual loan volume should be $500,000 or higher.

            Funding sources will consider portfolios or annual volume under $500,000 if funding source has a branch office within a reasonable drive of the auto dealer.

Q:        Are the loans performing?

A:        The payors on the loans should be making payments consistently as agreed in their loan contracts.

            Overall loan portfolio delinquency should be less than 15 percent.

            Loans that are delinquent more than 30 days will be excluded from the purchase or deeply discounted.

Q:        Where are the payors located?

A:        Payors on the loans should be located in states where the funding source is licensed and/or within a two-hour drive of the funding source's loan servicing branch.

            Some funding sources choose not to be licensed in states that do not permit adequate legal means from collection of debt or recover of the loan collateral.

Q:        Model Year of Cars preferred

A:        Some prefer 1995 and newer (Not older than 10 years).

Q:        Mileage

A:        Most prefer NADA criteria

Q:        Terms

A:        Up to 60 months; most prefer 24-30 months

Q:        Finance Limits

A:        For new loans, $2,500 to $25,000.  For portfolios, no balances lower than $300.

Q:        Down Payment

A:        Minimum of 10 percent of selling price (cash or trade equity)

Q:        Warranty

A:        $1,200 or cost + $400 (must cover at least half of loan term)

Q:        First Time Buyers

A:        Few will purchase unless there is a co-signor

Q:        Payor's Income

A:        $1,300 per month minimum household income 40 percent debit ratio of verifiable gross income 15 percent maximum payment ratio to gross debt.

Q:        Residence

A:        Three-year verifiable history preferred

Q:        Employment

A:        Three-year verifiable history preferred

Q:        Repossession

A:        No previous repossessions in the past year (no multiple repossessions)

Q:        Tax Liens

A:        Considered only on applications with IRS documented, approved repayment program

Q:        Current Delinquencies

A:        No new applications considered with current delinquent obligations

Q:        Bankruptcy

A:        Must be discharged and have at least one re-established credit reference

Q:        Child Support

A:        Applicants with past-due child support are generally not eligible

Q:        Self-employed

A:        Two or more years in business; income must be verifiable and vehicle must be for personal use

Q:        Dealer Employees

A:        Loans to management, salespeople, or employees may be excluded

Q:        Insurance

A:        Applicants must provide verification of insurance (30 day binders are not acceptable)

Q:        Type of vehicle

A:        Diesels, van conversions, exotics, and vehicles for business use may not fit funding source's parameters.

In addition, the funding source may request:

• Blank sets of legal loan documents
• A copy of the seller's credit underwriting guidelines
• Copies of three to five randomly selected loan files
• Description of vehicles

If your portfolio meets the above criteria, please feel out the Portfolio Submission Worksheet and Fill out and sign a Non-Circumvention and Fee Agreement


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