Since 1991, Consumer Portfolio Services has provided automobile financing to consumers with credit problems. Typical credit problems of CPS customers may include:
- Automobile repossession
- Collection and charged off accounts
- Low credit score
- First time buyer / or limited credit history
Millions of people in the U.S. are affected by job loss, divorce, bankruptcy, medical problems or other events that negatively affect their credit histories. These people, just like everyone else, need reliable transportation to get to work — CPS provides automobile financing for these people.
And, with the challenging economy of the past few years, the number of consumers with troubled credit profiles in the U.S. is growing. Recognizing this trend, most automobile dealers want reliable financing sources for their credit challenged customers. CPS auto finance programs aim to fill that need.
CPS Loan Profile
Our belief is that credit challenged customers are best served when they are driving reliable transportation with an affordable payment. To that end, CPS primarily finances used vehicles from franchised dealerships. These vehicles tend to be late model, lower mileage vehicles that have been reconditioned by the selling dealership.
Two important areas we focus on are:
- Employment stability. The longer a person has been employed, the better chance they will continue to be employed and thus have the necessary funds to make their car payment.
- Afforable payment and loan balance. The average loan CPS finances is approximately $15,000 with an approximate $400 monthly payment.
Business Development Overview
CPS earns its revenue from interest collected from our auto loan portfolio — the bigger the portfolio, the more revenue we generate. There are three ways to increase the size of our loan portfolio:
- Adding more dealers to our active dealer base
- Purchasing more contracts from our funding dealers
- Bulk purchase of auto loan portfolios
CPS has utilized all these strategies in the past to increase the amount of our monthly loan purchases, and will continue employing these strategies to acheive our growth goals going forward. (There can be no assurance we will succeed, please see Risk Factors in the Prospectus.)
CPS is considered a "full service" auto finance company. This means we generate the contract, collect monthly payments and provide repossession and liquidation services, if needed. Listed below are the departments and functions in the contract life cycle:
- Marketing - responsible for business development. Generates credit application and loan contract volume from dealers.
- Originations - responsible for making credit and pricing decisions on borrower applications received from dealers. Performs necessary document review and verifications to ensure contract packages are acceptable.
- Collections - responsible for collecting monthly payments from borrower customers.Payments are made via check, money order, credit card, debit card or automatic checking account deduction.
- Asset Recovery - as needed, responsible for repossessing and liquidating vehicles on nonperforming loans and collecting deficiency balances.
Contract origination and collection functions are supported by a dedicated information technology team. Based on historical loan performance and an extensive data archive that tracks hundreds of demographic and credit bureau factors, CPS has developed credit score and risk management programs to enhance our credit and pricing decisions on new contract purchases as well as our servicing effectiveness and efficiency.