Over the past two years, Westlake Financial Services has been snapping up the business that many other lenders left on the table.
Westlake, of Los Angeles, was founded in 1988 to make car loans to customers with risky credit. The company bills itself as the "Yes! Yes! Lender" because it finances customers other lenders turn down.
The business flourished during the credit crisis as other lenders exited subprime financing.
Westlake has doubled its dealer network in the past two years to 6,000, of which 30 percent or 1,800 are new-vehicle dealerships. In early 2008, franchised dealers accounted for just 11 percent of its base.
Franchised dealers are eager to sign up with new lenders to replace those that dropped out of the subprime business. Public auto retailers AutoNation Inc. and Sonic Automotive Inc. recently added Westlake to their lists of preferred lenders, the finance company says.
Andrew Schroeder, general manager of Watseka Chrysler-Dodge-Jeep in Watseka, Ill., never had heard of Westlake until he took the job at Watseka a year ago. "I was very surprised," he says. "I didn't think people who were that credit-challenged could get financed."
In 2008 and 2009, Westlake entered 12 states, placing it in 44 states by January 2010. Its Web site indicates the company plans to be in all 50 states this year.
Westlake funded more than 7,670 car loans in February, up from an average of 5,000 a month in 2009.
"We have strong liquidity," says Westlake CFO Paul Kerwin. "While everyone else was tightening credit, we've been able to stay in the subprime business."
In addition to private investors, Westlake has credit lines through Wells Fargo, Bank of America, Comerica Bank and First Tennessee Bank. The company also raised capital by selling auto loans as securities to investors in 2003 and 2005.