In this fourth of six profiles on loan aggregators, the Finance & Insurance Report takes a look at Finance Express. Aggregators combine technology and relationship building with lenders so that dealerships don't have to do all of the legwork to get customers financed. Next week: DealerTrack
David Huber's career as a car dealer changed dramatically one day in 1992.
The general manager of Huber's Peoria, Ill., used-car store telephoned him, saying, “Mr. Huber, we don't have any lenders.”
Huber recently had sold his new-car dealership in neighboring Bloomington, Ill. He rushed to the used-car store and found termination letters from all his regular lenders. The letters explained that the lenders don't do business with used-car dealerships.
“I found that alarming and shocking -- lenders who you had a long-term relationship with would not do business with you,” Huber said. “I vowed that day that I'd change that and mitigate the risks to make lenders realize they would and they could do business with used-car dealers.”
Huber kept his word. He is the CEO of Finance Express, a company he founded in July 2003. Finance Express connects thousands of used-car dealers with lenders nationwide.
Huber also sells dealership management software that tries to meet nearly all the needs of the used-car business. He also developed a loan process that mitigates risk to lenders while simplifying the process for dealers.
Now he wants more business from new-car dealerships
“Our goal is to streamline the process of F&I for the independent dealer,” Huber said. “We want to make sure the deal is put together the way the lender wants it, so there's no issues with the title, the lien or anything else.”
Screening
Finance Express pre-screens all loan applications that dealers submit. Within minutes the application is declined or approved based on whether it meets the lender's basic requirements.
From there, it's a “very high probability” the loan will be financed because it passed pre-screening, Huber said. He would not say what percentage of pre-screened approvals don't get final approval from the lender.
About 9,800 loan transactions are done through Finance Express each month. Most take two days to a week to complete, Huber said.
Finance Express' dealer clients come mostly from Manheim Automotive Financial Services and Odessa Automotive Financial Corp. -- the companies each own 15 percent of Finance Express. Finance Express markets to about 16,000 to 18,000 of the clients' floorplanned dealerships.
Huber declined to reveal his number of clients. He said most are in the Southeast, Midwest and Texas. About 98 percent are used-car stores. But Finance Express is growing to include some new-car dealerships. The company is also working to add six lenders to the existing 30.
“As we add lenders, it always adds to growth,” Huber said.
Typically, dealers pay a monthly subscription fee for the software they need, Huber said.
Monthly cost
The basic dealership management software system costs $115 a month, he said. That provides services such as inventory management and the ability to close a loan or cash deal. An additional $115 a month buys a subscription to the lender portal. That's Finance Express' search service to find a lender in the dealership's area to take the loan application.
Other a la carte items for specific needs include one that handles all of a dealership's accounting for an extra $65 per month.
Finance Express shares the profits made from adding an extended service contract to the loan, Huber said. The company also gets a fee from a lender when a loan gets funded.
Huber said his biggest challenge in building his business is the uncertainty in the economy in general.
Said Huber: “It's difficult to make long-term commitments when we don't know what this administration is going to do with taxes, long-term health care costs and other issues in the news.”
