Capital One hunts new-car loans via dealers
Nissan dealer Greg Brown's first loyalty is to Nissan Motor Acceptance Corp. But he says Capital One provides great support to his two greater Los Angeles dealerships.
Brown is a dealer council member for Capital One Auto Finance, which is putting more emphasis on new-car loans while pursuing its historically larger business in used cars.
One way Capital One is seeking to increase new-car loan volume is through its Diamond Dealers program. Dealers who qualify, by steering enough volume Capital One's way, get priority service and access to Capital One marketing programs.
In first quarter 2012, Capital One auto originations were $4.3 billion -- up 66 percent from a year ago.
Brown owns Buena Park Nissan in Buena Park, Calif., and Puente Hills Nissan in City of Industry, Calif. He spoke recently with Special Correspondent Jim Henry.
How's it going in F&I?
Financing is going great. Gross profit is up across the board. For customers, consumer confidence is definitely up in California. The recovery seems to be a little more under way.
You're on Capital One's dealer council. The company seems to be going great guns.
They have been really supportive of my two dealerships. They really maintain that 125 percent loan-to-value plus a guaranteed back end.
They've got rates as low as 1.9 percent. That really makes us competitive.
What do you mean by a guaranteed back end?
They guarantee you can hold profit. In other words, if you look at the LTV, that's before back-end profit.
So they don't count F&I products in the calculation of loan-to-value.
Capital One often says it wants to be a dealer's No. 2 lender behind the captive. Is that your experience?
Capital One really understands that dealers have to be loyal to the captive. They know that our No. 1 priority has to be the captive.
How does Capital One pay you if it has an advertised low rate? Do you get a flat fee, since you can't mark up the interest rate?
We can mark it up. For instance, if the customer's rate is 2.9 percent, the buy rate might be 1.9 percent, and we can mark it up.
Has Capital One always been big in California?
I don't recall them having a prime program on the West Coast, but they've been awesome. For a bank, they have the lowest rates on the West Coast.
You can reach Jim Henry at email@example.com.