Former Drive Financial Execs Leverage Experience to Re-Enter Marketplace with New Subprime Lender
DALLAS — In an exclusive interview with SubPrime Auto Finance News, Inspire Auto Finance, a subprime auto finance lender, announced its entry into the market.
The management team spent 18 months developing a custom technology solution and reworking its subprime lending model to create company with a high standard for decisioning, customer care and profitability, in addition to automation and performance.
"Over the past 18 months, in order to achieve ‘The New Standard,' Inspire built a revolutionary patent-pending credit module and dealer-desking tool — iLender," Burton Brillhart, president, told SubPrime Auto Finance News this week.
"The company developed all capabilities and infrastructure in-house and formed strategic alliances in technology, origination and servicing to operate efficiently, effectively and safely in the national subprime marketplace," he continued
The credit profiles of Inspire's borrowers fall into the ‘D' market.
Brillhart indicated that the company has already obtained sales finance licenses and regulatory approvals in all 50 states.
"The company has the complete flexibility to target and enter any market at any time," Brillhart explained. "Inspire intends to roll out the program using a three-phased approach. Inspire is presently operating in Texas with a select group of dealers."
And it will expand to encompass seven additional states by the end of the year, targeting select multi-state dealer groups. The company said it intends to go national within the next 24 months.
"Our intention is to serve franchised dealers who generate consistent subprime loan volume at predetermined levels," Brillhart pointed out. "We have pre-populated our dealer application program with 12,000 dealers meeting these criteria. These dealers will have immediate online access to the dealer agreement and once executed can begin submitting applications within 24 hours.
"Interested franchise dealers who are not pre-populated will be asked to provide additional information and interview with a member of our marketing team before they are granted access to the dealer agreement," he highlighted.
The application process is available at www.inspireautofinance.com.
Basically, Brillhart said, "Inspire takes a balanced approach to our loan approval process. While our decision is not FICO driven, our customers typically do have low FICO scores, which can drive interest rates higher. We look for customers who demonstrate stability at both their residence and employment, and do not purchase first-time buyers and self-employed individuals.
"At the heart of our program, we give weight to loan structure and collateral value retention," he continued. "Our commitment is to place customers in cars they can afford to drive for the long term and encourage dealers to sell more economical units when the consumer cannot afford the vehicle they initially desire. When dealers meet this challenge, they are given a rational price, which balances the risk and return hurdles for the company on the specific piece of collateral and dealer profitability."
The loan contracts will require significant cash down payments, conservative and consistent loan advance rates and low-mileage, affordable cars.
As part of its redesigned lending model, Inspire deployed new dealer-specific platforms set to raise the industry standard, including:
—iLender, Inspire's patent pending, "thinking system" for decisioning.
—iRewards, a world-class dealer rewards program.
—iRep, dedicated virtual services and representatives for dealers.
Inspire partnered with DealerTrack, Credit Management Solutions, CenterOne Financial Services and Black Book to deliver a superior service and world-class financing solutions to dealer partners and consumers.
"More so than any other time in our industry's history, we recognized the importance of providing a solution that would shorten the decisioning process while minimizing the risk for both the consumer and our dealer partners," said Thomas Brower, chairman and chief executive officer. "As we enter the market, our innovative solutions and proven platforms help our dealers drive greater sales while also helping consumers with their loan financing."
The ultimate goal of the company, Brillhart indicated, is taking the approach that each operational element of the auto finance business is an opportunity to turn the traditional processes inside out and make them "smarter, more efficient and more consistent."
"Through this ‘whiteboard' approach, Inspire has created a platform where its dealers can qualify, contract and fund a subprime contract within 24 hours," he remarked. "Inspire believes this process will be ‘The New Standard' of subprime."
Brillhart pointed out to SubPrime Auto Finance News that the new lender has a "very talented and experienced management team."
"The team has a combined strength of more than a century of experience in auto finance industry. This experience has survived several subprime economic cycles and weathered many a storm," he explained "Our thoughtful approach for strategic planning and implementation, and our willingness to take decisive action is what drives our success.
"During the 2002 economic downturn, the subprime industry faced depressed inventory prices; decisive action allowed our management team to not only save but grow a company," he added. "By increasing prices and simultaneously decreasing PTI minimums, growth projections were slashed. While the action was unfavorable at the time due to the perception of volume reduction, the result was a reduction of capital dependence and an increase in revenues."
The management team consists of:
Chief Executive Officer and Chairman: Brower
Brower founded the first subprime company, Finance Security, which he merged with Summit Acceptance Corp. (now Capital One) and instituted subprime lending, officials indicated. He also founded Drive Financial Services (now Santander Consumer USA), which became one of the nation's largest privately held subprime lending companies.
Brillhart served as general counsel for Drive Financial Services where he oversaw the company's litigation and $800 million sale. He also served as senior partner of the Dallas law firm Godwin Gruber PC, where he focused on banking and consumer financial services, employment and intellectual property.
Chief Operating Officer: Mark Gallas
An operational veteran of the auto finance industry, Gallas served as the first vice president for loan administration at Countrywide Financial. He also served as senior vice president and compliance officer for Drive Financial Services.
Chief Financial Officer: Jody Day
A long-time senior financial and accounting expert of the auto finance industry, Day served as the chief accounting officer for Drive Financial. He also served as the chief financial officer of First City Funding and vice president and controller of Sovereign Credit Corp.
Chief Information Officer: John Fineout
Fineout served as the senior technology leader at Tatum LLC, Carreker Corp., Capital One Auto Finance and Banctec.
Chief Credit Officer: Craig Allen
Allen founded Delphi Structured Finance Corp. and related companies, providing asset-securitization and credit evaluation services in the U.S. and Europe. Allen was an early pioneer in non-prime auto finance. He served as a founding partner of the Aegis Holding Corp., which went public as a consumer finance company in 1994. He began his structured finance career at Bear Stearns in 1987.
So despite the weakened economy that is causing many other lenders to scramble, Brillhart said his company actually sees the current environment as an opportunity.
"What is being called a ‘credit crisis' is a global adjustment to lending at sustainable levels. This creates a great opportunity for Inspire because it has forced our competitors to eliminate most of their aggressive unsustainable and irrational lending practices, paving the way for a sensible program that puts customers in a position to succeed," he explained.
"Unburdened by portfolios originated in the form credit environment, Inspire is free to focus on current originations. Inspire's program, born out of Inspire's management experience, is based on the sound principals of ability to pay, commitment to vehicles that have demonstrated reliability and utilization of current technology to consider total cost of ownership and maximize efficiency. We feel our product is perfectly suited to the credit environment moving forward," Brillhart stated.
Historically speaking, subprime lending on transportation has been around for a very long time, he noted. And the recent hard times will not alter this course.
"It fulfills a true human need and will continue to serve this need well into the future. The forced de-leveraging of financial institutions has resulted in the forced de-leverage of the consumer," Brillhart said. "This does not mean the elimination of leverage for either the consumer or financial institutions. The capital continues to be available for prudent leverage opportunities. Application of credit fundamentals, discipline of execution and attention to detail has been and will determine our success."
Another big part of the company's mission is giving back. To do this, the company created the Inspire Foundation, www.inspirefoundation.net, as a national nonprofit organization that donates 10 percent of company earnings to various charities.
"In addition to monetary assistance, the foundation plans to offer educational opportunities and a variety of inspirational programs where they are needed most," Brillhart concluded.
For more information, visit www.inspireautofinance.com.