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Is anyone successfully using Credit Acceptance Corp?
I'm trying to get some dealer input about CAC instead of just input from CAC. They want $10k and tell me that it's a great program with the right inventory, but according to their public financials the average dealer only does 3 CAC deals per mo. I have a small lot located in Louisiana and it's primarily just a Special Finance Store. We currently primarily do RTO/LTO, but looking at CAC to make some front end profit instead of going in the hole on every one and depending on the revenue stream. I've used DSC's RTO/LTO line and it was awful, I've used Finance Express and we never completed a deal with them. I used a company called Fairway Lending out of Duluth, GA until they went bust, and they were great as long as the inventory fit the program. When I find a good program, I buy inventory that best fits their program. Any input or any other finance company suggestions would be great.
Replies to This Discussion
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Permalink Reply by Mark Marino on -
I just had a guy from CAC at my lot today giving me the pitch. It doesn't seem like the type of deal I would be interested in. I do know a few other dealers doing very very well with them. The profit on the front end would be nice but it just to me seems a little unrealistic. The real money would be made on the paper over the next 3 years. If a dealer could sell enough cars on the program it could be excellent for cash flow but only selling 2 per month on it you'd probably not realize any substantial profits for some time considering the monthly and transaction fees.
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Permalink Reply by jerry weeden on
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Michael-Sounds like you need to talk to me about Prime Eagle.We can fully fund your deals and get you into a positive cash flow.Call me at 810-938-7740. Jerry Weeden
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Permalink Reply by Guy Manasse on -
I was a CAC dealer before i sold out but it worked extremely well once you hit your thresholds for payout. There are a couple key elimates. 1. It is hard to make upfront money based on book values and what you pay for cars. The backend profits are excellant if you have good paying customers. 2. Stay involved in collections, look at them all the time, keep your customers coming into you for payments so you can keep tabs and customers engaged. 3. Do not fudge the criteria, remember it is your money, you are only kidding yourself. This is the hardest ones for Dealers to do. Funding is based on risk, and if your tier level is higher they fund less, you will only hurt yourself. Plan on seeing good results after 8 months to 18 months. It is a slot machine once you get it going.
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Permalink Reply by Karl Jensvold on -
We just closed our first pool and recieved a check for $28600 for the express check. It took about 20 months for the first pool but we are on track for a pool each year. We averaged $1145 up front on the first 100 deals and I should have an additional $100k coming in the future as the pool pays out. If you don't get the first 100 deals and close out the first pool they keep all the backend money your accounts earn. You have to be committed to the program at least to close out the first pool.
Inventory is key, that 3-6000 acv range works best and under 125k miles. All of the deals get a warranty on them so the customer has some protection.
It works for our store since we have been set up with this type of inventory for years and used Western Funding so we have always marketed to this buyer. It would be a hard program to use if you carry a more expensive inventory and how you price the vehicle is key.
I do pay an additional $100 bonus to my salespeople for CAC deals since it does have a lot of additional paperwork and stips. My salespeople work the deal from start to finish. The CAPS system is great and the ability to instantly approve a customer is a strong tool. We can always work with other lenders once we determine how much down payment we are working with.
Your dealer rating is important since it determines your upfront advance, we worked our way to a 1 rating but it is a 2 most of the time. This makes a difference of about $400 upfront on each deal.
Sorry to ramble but yes it can be a great program for the right type of dealer and it can make some money. In my previous 20 group many of the dealers had great success with CAC and were moving on to other lenders or their own BHPH programs. It was CAC that gave them the seed money for BHPH or new lenders.
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Permalink Reply by Robert Moy on -
How is it...that you have to pay them in order for you to use their program. $ 10K up front? Like it has been said, if you have to pay someone in order to try to make money, then is too good to be true. Besides, they force you as the dealer that the only extended service contract that must be added is one that they push. Have any of you checked the track records of the third party service provider they are using? Google it and you will find complaints after complaints. If I am not mistaken, they were or still pushing Wynn's, they have about 20+ complaints posted on google. And the other one they are using First Automotive is not looking any better. Again, why should you have to pay any lender money in order to use their program? I would think they are holding a good chunk of your money from the transaction as it is...is not like they pay you full funding..Right?
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Permalink Reply by Jeff Carress on
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Robert
Spoken like a rep from a competing company..... oh wait you are a rep from a competing company! As a matter you are the "President " of a competing company! Kinda takes the wind out of your sail. I also work for a competing company and prefer to tell a dealer the good points of both companys and let them decide how to proceed Just my 2 cents (sorry I stole that line from somebody) Love Jeff
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Permalink Reply by Robert Moy on
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I am not saying whether CAC is a good or bad company...all I am saying is that if they want the dealer to use them as a lender, why should a dealer have to pay them anything in order to finance through them? Does other lenders charges dealer up front $$$? does Westlake, Americredit, CPS, or any other charging dealer money?
I am sure some dealers have success using their program and that is all that is important. But why have to pay a lender money? What is their reason to charge? I have worked with many Special Finance lenders and they all have their own niche.
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Permalink Reply by Sheldon Wolff on -
CAC is a good company but they lock you in because of thier long term pools. Its great if your going to partner everything to them in a high risk low budget area. They also have another plan that you get a percentage of the money & deals if you dont pay the 10Th up front. To pay them & have them take a % from you also is rediculous personally thinking though. Your on the paper, your also sharing in the risk and if you want a recourse deal then look around. There are a lot of sub prime companies that will take your deals.
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Permalink Reply by Mary on
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I ran the CAC program for 7 years. I paid the $10K upfront. (Now they put it on the back end) That is not such a good deal. When I signed on, I went to the dealer principal training in Michigan, I met a lot of key people I remember being very impressed with their operation. The $10K included the training, (You pay for your own travel) promotional materials including signage ongoing support and web and phone training.) Not sure if they have changed this, but that is how it was when I signed on. They even have an online university of which you could train each your personnel.
The Good:
As far as a Sub-Prime Credit and Collections company,
The training and ongoing support is fantastic. Your Market area manager is also a key factor!!
CAC does report to all 3 Credit Bureaus all the time not sometimes, every month and to all 3.
The stipulations are fairly easy and commonplace in all sub prime
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A.) If you get all stips up front and put them in the order of the checklist you will get funded faster.
Pay Attention to the details of the stips! (Make sure you check the dates on the stips)
(people have a way of giving you a utility bill front 6 months ago)
Their CAPS system is Easy to use. If you go for this you must learn their system well. This is Key!!
You must learn how to WORK the system Terms, Down payment, Warranty,
CAC Allows you to Cap your pool at 100. Cap your pools immediately. The first will be a portfolio check. (It is an advance off the advance of your portfolio) then your hold back money will come in monthly.
They Do pay your hold backs and are a strong company. But what a lot of dealers do not know is you must have and maintain an 80% collection rate to collect your hold back. They use a rolling average. This is fair because some collection months may not be good.
They Provide a monthly accounting of your portfolio and your market area manager will go over goals with you to help you make more sales.
The Bad:
Inventory: You really have to "Steal" the inventory to make money. We were successful because of the way my husband buy cars. Not all cars will work with this program. Not meant for High line vehicles or most foreign vehicles. Stay with Domestic Cars that people want to Buy. Don't buy Junk. It won;t work
As I said above, you must really work the program to your advantage.
It must be a Win for you, (Upfront Gross) Win for the Bank (Collections) and Win for the Customer (Payments).
When working your deals -Think Upfront Gross rather than Back End.. Buy Good quality cars that are going to last the terms.
CAC made it so that you have to put in a warranty in the calculations. (Warranties are optional) but if you take out the warranty you get far less profit and will be unable to make the deal
(The good point about selling cars with warranties is if you have a service department -You can service the cars under the warranty and make money) We made a ton of money servicing the warranty.
I used Wynns and never had a problem getting the warranty work paid for)
I was disappointed in their Collections. I have a couple out there that owe quite a bit of money. They stay on your portfolio and they say the never stop trying to collect, and I am sure they are doing everything to collect as they have a huge collection and legal department, but I felt some have slipped through the cracks.
CAC has signed on too many dealers. When I signed on there could not be another dealer within at least a 1-2 mile radius of mine. They changed -now there is one on very street corner.
CAC Charges every month Fee to use The CAPS System. (You can also do credit reports on the system.
CAC also charges Fee per deal for the 1st 100 deals (one time charges) after that you never get charged again.
CAC changed their policy on the $10k They now (or did) put it on the back end- to get more dealers to use their program. Not a good Idea. You will never see your back end!!
CAC has a good program, but when they started signing on other dealers next store to me, and a bad market area manger. I got turned off. I worked this program exclusively and was very profitable and am now collecting on my second pool. Because of the above, I no longer use the program.
This program is not for everybody, It is a long term program and it takes a while to reach the 100 deals, unless their is no-one else in your area, but if you Learn it well, Buy the right inventory, Qualify your customers well and follow the program it can be very profitable for you.
Overall, in my opinion, they are a good company compared to the Sub prime lenders that are out there.
Hope this helps with your decision
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Permalink Reply by John Douglas on -
Signed up almost 2 years ago, and are just about to cap our first pool. I think we need 3 more units.
As mentioned above, CAC has it's pros and cons. You do have to be in a unit right to make it work, need to be back of average book (yea, I know - good luck on that!) With wholesale prices so high now, it's hard to buy units that will fit. We have put some aged units out on CAC with a breakeven or even a small loss (the loss would've been greater had it gone to auction).
Best units are those which would retail for $6-10K. You all know how hard those are to buy these days.
The difference between CAC and your traditional sub-prime lenders is that it allows you to participate in the backend money. It is (as mentioned) really just an enhanced BHPH program in which you are not putting so much money on the street.
We paid $9500 up front, and they collect $95 per deal on the first 100. So when I do cap my pool, CAC will be into me for $19K. Don't know what amount to expect on my Express Check, but I'm only netting anything over that $19K. And, I don't know what to expect from my monthly check. They're supposed to pay 80% of all monies collected. Our dealer rating is currently (1), but it goes back and forth according to collections.
You must underwrite deals correctly, or it will bite you later in your dealer rating. Don't fudge the numbers! You're better off to have a customer rate low and perform better than their rating than vice-versa.
I agree with Mary, they've signed on so many dealers in our area that the program is not unique. One dealer in our area is a CAC darling, having capped over 40 pools at the time we signed on 2 yrs ago. With all the additional dealers CAC has signed on, I doubt he's killing it like before.
Your area manager is very importatnt. I speak from experience on this. Our first AM was very detached, didn't return calls for a day or two, and really wasn't very supportive. He has since been replaced by a guy who has worked the CAC system successfully at a couple of dealerships, and he is very helpful.
In summation (I know...finally!), if I were in an area where there were no other CAC dealers, I would sign on again. But considering the situation as it is now, we will probably not be as aggresive in running a deal thru CAC. I basically just want my money back!
One question I have, that some others may can answer: What kind of monthly check can I expect after the Express Check? Our average financed amount (excluding warranty) is higher than most CAC pools, probably about $8K. Our pool is paying well (Dealer rating varies 1 to 2) and we've only had 3 repos so far.
Mary, would you venture a guess?
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