As Printed in Canadian Auto News - May 2011

Cars on Credit-The Success Story

Chris McMunn, President and CEO, Cars on Credit .ca Inc.

Special finance companies come and go.  We’ve all seen it and have been witness to the mistakes the others have made that lead to their ultimate demise in the marketplace.

Cars on Credit began as a small automotive leasing company and they are now the fastest growing subprime lender in Ontario. They’ve grown and are continuing to grow and are getting stronger. Cars on Credit understand the principle of being accurate, timely and adaptive and that attitude resonated throughout the time we spent with them.  The benefit of that structure is they can now focus on growing rather than reacting to the past.  Decisions made are planned, not reactionary.

They have learned quickly and in our discussion they have some interesting stories to tell.  

We met with Chris McMunn the President and CEO of Cars on Credit to gather more insight into their success....

Who is Cars on Credit?

“Cars on Credit is a privately owned “special finance” leasing company established in October, 2007. We currently do business with more than 160 dealers across Ontario and have a portfolio in excess of $6,000,000 with a focus on doubling that figure in the next 12 months.”

How is being privately owned beneficial to the dealers?

“The fact we are privately owned company gives us more flexibility in the lending decision.  With us there are no absolute “no’s”.”

What makes Cars on Credit different from other “special finance” lenders?

Every dealer has experienced the frustration of sitting across from good people and having to tell them they could not get them approved.  National lenders do not have the opportunity to think because of the scale of the operation, they have to have a rigid underwriting policy.  We don’t.  Customers make mistakes and these are the types of opportunities we look for.

We look at each deal on an individual basis. Our underwriting criterias are broad, allowing us flexibility and objectivity in the approval process. Our unique method of analyzing each deal is what sets us apart from our competitors. While other lenders evaluate each vehicle by using the Canadian Black Book,  we realized a long time ago that this is a very limiting method of structuring each deal.  We assess the valuation of the vehicle by looking at what is fair and realistic in the marketplace today.  If we have to bring the car back, it’s important to us to know what the car is realistically worth in order for us to put it back on the road with another customer in an affordable manner.

We have a user friendly portal that allows the dealer to submit the application, watch the deal as it moves through the system to approval.  Once approved, the dealer can then print the lease documents and execute them for delivery and funding. Every vehicle that is delivered is equipped with a GPS locator and a start interrupter.  This allows us to monitor each customer closely ensuring they don’t fall behind on their payments, losing the car they worked hard to buy. In essence the GPS is a collection aid more than a recovery aid. We currently have less than 1% delinquency in our portfolio.

Share with us some of your successes

We planned ahead of time by aligning ourselves with an accounting firm that would work with us in partnership to achieve our goals. We invested in and developed our online portal allowing us to maintain the size of our company while anticipating growth before volume dictated.  When volume increased, we were one step ahead of it. The web portal and administration software companies that we work with are the best in the industry. All of these companies shared our vision and worked within our plan for a larger company.

We remarket our repossessions to customers that could not be approved for new contracts. Those customers are put into a lease takeover and we pay our dealers $1000 for each referral.

Now tell us about some of your failures

The first lease administration system we purchased didn’t work. It was frustrating and expensive and we ultimately had to admit the failure and move on. We stumbled on some of our initial software purchases.   Through a recommendation from another lender, we found the software provider we now utilize and feel the relationship is strong and will remain that way.

Where is Cars on Credit going to be in 5 years?

We are going to be a much larger company.  No one is growing as fast as we are right now and no one is prepared as we are for that growth.  Three years ago we were prepared for where we are today and today we are prepared for where we will be three years from now.  We`ve watched what other lenders have done which has left them dead at the side of the road.  We know what systems, people and capital are required to place us strategically where we want to be in the future.  Our portfolio will probably peak at 1500 leases and we will maintain that size.  We are a success story so far and we will continue to be.

This is one of the most exciting organizations I have spoken to in a long time.  Cars on Credit is highly energetic, trend setting and bold. Their confidence and strength is very good news for automotive dealers across Ontario.  We finally have a “special finance” lender that is here for the long haul and is perfectly poised to serve auto retailers consistently and proficient manner.