Bad credit car loan originator CPS releases its latest financial results that show the subprime auto loan sector is still waiting for the market to turn in its favor
Auto Net Financial
At Auto Net Financial, we specialize in helping consumers with bad credit improve their credit scores and reestablish their car credit by financing a new or recent pre-owned vehicle with a bad credit car loan. This means that if you’re a consumer who has experienced a bankruptcy, slow pay, repossession or other bad credit issues, our nationwide network of dealers can give you the opportunity to drive a quality vehicle and reestablish your credit at the same time.
Unlike “buy here pay here” or “tote the note” lots, these dealers work with a broad spectrum of subprime lenders that report to the credit bureaus, so that your positive payment history can earn you a higher FICO score and the chance to qualify for better rates and terms the next time you shop for a car.
Unfortunately, these very same subprime lenders also depend upon the securities market to fund their loans and supply them with the capital necessary to make new loans – the very same market that was devastated by the subprime mortgage mess. As a result, these lenders have been impacted not only by the financial markets, but by rising unemployment, as both forces have combined to make car lending more difficult for credit challenged consumers.
A case in point
This week, subprime auto lender Consumer Portfolio Services announced its operating results for the third quarter that ended on September 30th. And while its results were better than last year’s, economic challenges remain and the company continues to operate in the red.
For third quarter 2009, CPS managed to cut its operating expenses nearly in half (from almost $105 million to just over $57 million). But even with this cut in expenses and a reduction in losses of $2 million, net losses for the third quarter still amounted to $4.3 million.
With the loss of working capital, revenues were also down. At $177.2 million, earnings were down almost 40% from the $293.8 million in third quarter revenue posted in 2008. Without a way to bundle and sell its loans on the open market, at least in the amounts and at the interest charges that it has done in the past, CPS has been unable to generate as much cash as it needs to originate new loans to match the volumes it has enjoyed in previous years.
“We believe the third quarter marked an important turning point for the Company in navigating the treacherous waters of the Great Recession,” said Charles E. Bradley, Jr. “The improvement in the capital markets that began in March has finally reached us. As previously reported, we opened a new credit facility in late September that has allowed us to begin our efforts to purchase meaningful amounts of contracts again. We also feel that attracting additional funding capacity should be achievable. In addition, subsequent to quarter end we took over the servicing on a $146 million portfolio which improves the operating leverage of our servicing platform. All of these events should put us on the path to growth in 2010.”
The current economy and bad credit car loans
While the current bad credit car loan market is depressed, most of the subprime lenders out there still have some money to lend – although a return to pre-recession levels will take much longer than most in the industry had anticipated.
At Auto Net Financial, our advice to consumers seeking bad credit car loans hasn’t changed since the beginning of the financial crisis:
1) Know your credit score and what’s contained in your credit report
2) Plan on coming into the loan with at least 10 percent down in cash or trade equity
3) Keep the loan term as short as possible
4) Buy a compact of midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit.
We’re here to help you
At Auto Net Financial, our business is helping people with credit problems get approved for new and used car loans. Our affiliate dealers work with the leading subprime lenders to get you approved. Your credit report will get checked by the dealer, but once you’re approved, each month you make your car payment you are rebuilding your credit score and reestablishing your financial future.
Unlike many other services, we belong to the Better Business Bureau and our web site is SSL secured, ensuring the privacy of your personal information.
Visit www.autonetfinancial.com to see what we can do for you.
