MARBLEHEAD, Mass. — FinCo Management, an emerging provider of consumer finance solutions to the used auto industry, announced during the National Alliance of Buy-Here, Pay-Here Dealers conference that it is now purchasing subprime and deep subprime consumer contracts.

Toby Reiley, FinCo's chief executive officer, discussed the launch of his company's Buy-Here, Pay-There Hybrid product during the conference.

"This product opens the door for dealers to sell cars to consumers who previously did not have access to financing. Our unique model allows the dealer to take a small profit at the time of sale and a full profit over time," Reiley said. "These profits can be much larger than traditional sales, but the dealer takes the profits near the end of the contract."

To support its contract purchases, the company obtained a new credit facility led by Metropolitan Equity Partners, as well as additional growth equity investment from current and new investors.

With the infusion of capital, Reiley said the company expects to advance more than $30 million to dealerships over the next 18 months.  

FinCo Management's hybrid product allows dealers that do not have a finance department to gain instant entry to the BHPH market without any investment of cash, software or extensive training, Reiley boasted.

He explained that the contracts are funded in two days for 50 percent of the amount financed up to the auction price of the vehicle. The dealer can recoup the cost of the vehicle upon sale and realize profit from future consumer payments over time, Reiley added.

"We recognize there remains a large number of successful dealerships who could achieve a higher level of sales if only they were able to provide direct financing to unbanked subprime and deep subprime customers with the personal cash flow to support payments on a used automobile," said Reiley.

"FinCo Management covers every detail and operation, with the dealer benefiting from the centralized operations. The only requirement on the dealer is to source and sell the cars to the usual customers," he continued.  

Matt Houlihan, general manager at Lewis Motor Sales in Lawrence, Mass., was an early user of the product. He said, "FinCo saved a sale that no other lender would have bought. We covered all expenses at closing, took a small profit and have the opportunity to realize $3,100 of profit over time. Without FinCo, that buyer would have been lost. We expect this program to capture sales that previously would have walked off the lot. It was easy to learn and use."

"Many small- and medium-sized dealerships are hampered by a lack of access to the capital markets and are unable to manage the cumbersome requirements of most third-party lenders," said Paul Lisiak, managing partner of Metropolitan Equity Partners. "We were attracted to FinCo Management based on the company's intelligent partnership approach, which has properly aligned the interests of the dealership, FinCo Management and investors."

The FinCo Management offering integrates with third party suppliers such as Fiserv Automotive Solutions, Monetrics, Subprime Analytics, Carleton Calculations, Convenient Cards Inc., Heartland Payment Systems and Authorize.net.

Bill Mahoney, previously Bridgewater Associates' director of sales and marketing, and David Kornbluth, of RIK Enterprises, have joined the company's board of directors. The board also includes treasurer Jay Hole and Reiley.

FinCo is currently approving dealer advances in Massachusetts and will begin accepting applications for initial dealer partners in California, Florida, Texas, Tennessee and Illinois in June.

The company is licensed/approved in 30 states as a retail sales finance company and is represented by a network of independent sales representatives.

For more information, visit www.finacomanagement.com.