Reduced Advances For Chrysler Brand Products

[jules4jeeps]

Just got my "revised" Chase rate sheet for May 1 - May 4...they will only advance 80% of invoice on 2009 models that are Chrysler brand. I also read in another forum that Wachovia has made similar cutbacks. So far my local banks are stepping up to the plate, like they always do.

[XDCX]

Thanks for the information, I was worried about that.....

I was watching CNBC yesterday and Phil LeBeau was asking his panel of "experts" if they thought residuals would decline on Chrysler vehicles as a result of the bankruptcy. (He said residuals, but I think he meant advances)

I think he's got great sources. I wouldn't be surprised if he had some information about pending changes at the banks but wanted his "experts" to make the statement.

[CL Pgh]

Couple weeks back Chase hit us for addition down $ because the unit was a demo. We explained this was an untitled, dealer mso, non-rental… real life, 09’ / 4,500ml sales demo. They booked the unit value as a used car… wanted 2K additional down. Today they did the same on a New 2009 Aspen… said because it’s a cancelled production unit they depreciate the advance value. That one pissed me off!

[Granch]

My Wachovia rep told me advances would now be an issue, he said shoot for around 80-90% on most new and used. I also ran into the advance issue on a 09 PT Cruiser with Chase the other day, they wanted it at about 70%.

My rep at Wachovia who Ive known for years told me they had a meeting, and they expect with the BK and inevitable dealer closings the market on Pre Owned will be flooded and values will be dropping...

[MUAlum92]

This was what I've been afraid of - advances being limited due to the BK.

Now, to clarify, the revised Chase rate sheet from the 1st that limits advance to 80 % LTV....that's only on the subvented retail apr program, right??

I ask because we received the same one (on the subvented program) yesterday as well, but haven't received any word from Chase that advances would be further limited in their standard program.

We're getting ready to sign up with Wachovia, but haven't heard about advance being limited any further from any other of our lenders.

Trying to keep the panic at bay.......

[jules4jeeps]

Well, I believe that Wachovia, from what I read in another forum is another lender limiting advances as well. I considered signing them last month, but their rep returned my phone call with a very lukewarm attitude and clearly but vaguely mentioned "their expectations" from us. I don't need a look to book count meter ticking away in the background w/ a lender who doesn't respect my product. I pretty much assume most of the bigger banks with a national scope, will treat Chrysler brand lending with much disdain. Fine by me. I'd rather give my biz to the banks who sponsor my local little league teams and provide free coffee at the senior center.

My best sources are and I believe will continue to be local banks. I have met these people, the REP and the BUYER and generally the same person, or both are at least local and accesible. Again, same banks who got NO TARP funds.

Not sure if Chase's 80% LTV is for their "sub-vented" (5.9% x 60 is freakin sub-vented???) or regular stuff. I can send those deals to a local lender, at 5.89 and still make almost a point and a half.

[Granch]

So far Bank of America has been pickin up the slack for me, I had a good workin relationship with Wachovia for a long time, I guess that will be over.

I just saw that 80% ltv. with chase updated yesterday...

[MUAlum92]

I hear you.

We try to do most of our business with credit unions. We have Meritrust (formerly Boeing) a few hours away and they'll buy almost anything from us. Also, most of the credit unions advance off of retail.

I've had great success with Wachovia in the past, which is why we are signing up with them. We'll use them mainly for used cars, which is about 75 percent of our business.

I think there will be a ripple effect with most larger banks rolling back advances until this think gets out of the BK court. Frustrating, but can't hardly blame them.

It will certainly be interesting the next few months with the rules probably changing every few days. We're going to have to stay on our toes.

[MUAlum92]

Looking at the Chase rate sheet from the 1st. It IS for the subvented program (May 1-May 4). HOPEFULLY, advance won't be cut back as far under their standard program. Keeping fingers crossed.

[jules4jeeps]

I would love to work with a credit union at this point, but I cannot find one unless I do the CUDL program which costs $400 a month. I am in Chicago metro market and do not know of anyone who uses a credit union unless they're hooked up w/ CUDL. I cannot justify paying $400/month for one or two deals that I must likely will only make a flat on.

[MUAlum92]

That seems high for Cudl, but it may vary market to market. We're in Kansas City and I think our fee is like $295/month.

Best $295 we spend.

We probably get three or four deals a month we wouldn't get without them and capture another 3 or 4 we'd lose financing on without them.

The flat can be frustrating, but at least you get the opportunity to sell something. And, most of the banks have increased flat schedule if you charge more rate. For instance, Westerrra (one of our bread and butter credit unions) gives you a 1 % of the amt financed at buy rate, 1.5 % with rate increase and 2 % of the amt financed with another rate increase.

We're not seeing our dollar per copy suffer by using Cudl.

[jules4jeeps]

Ya, just got the call from my Chase rep. They will be limiting the advances on ALL Chrysler brand products, new, used, subvented, and otherwise. I told him to make sure his bank makes continued good use of their TARP funds with moves like this. I told him to have fun calling all his CJD dealers with this news, too. He's not happy about it either, he has a couple CJD stores that he gets 40 contracts a month from. I might just have to "unfriend" him on facebook now...

Unfortunately we aren't selling enough cars now to justify a $400 F&I expense. We are operating bare bones now. We did not renew many of our dealertrack add-ons recently either. Pennies carefully carefully watched now.

[XDCX]

I wanted to bump this thread to see if there are any other banks that are cutting advances since Chrysler filed for Chapter 11?

Also, has Chase cut their advance for all programs across the country or is this a regional issue. (I'm guessing it's national, but I wanted to see if other dealers had received the same notice.)

[Txflyer]

Originally Posted by XDCX

I wanted to bump this thread to see if there are any other banks that are cutting advances since Chrysler filed for Chapter 11?

Also, has Chase cut their advance for all programs across the country or is this a regional issue. (I'm guessing it's national, but I wanted to see if other dealers had received the same notice.)

I just got a call from Chase on a used 2007 PT Cruiser. It was definitely cut way back from what they used to do for us.

[jules4jeeps]

So far, from what I know its just Chase and Wachovia. And I know a couple of banks (Cap One, US Bank), last summer when gas was over $4/gal began limiting advances of big SUV's and banks period are just being pickier and wanting more cash down on almost any deal. And thats how I'll present it to customers when needed. Onward and upward, I'm certainly not gonna get to riled about it anymore. It is what it is. Local banks have not indicated any concern or advance cutbacks. And hopefully it stays that way.