Automotive lenders are increasingly offering subprime auto loans again as credit-challenged consumers' access to credit expands. Some analysts believe this trend will continue to boost auto sales as the recession's effects gradually fade. However, lenders must ensure loan quality is maintained, as aggressive subprime lending practices could lead to increased defaults if borrowers' ability to pay is overestimated. Adopting GPS tracking systems allows lenders to better monitor collateral, identify poorly performing loans, and take precautions to safeguard against future economic turbulence.

1. Automotive GPS Solutions
Will You Be Ready for the Next
Automotive Finance Storm?
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2. Capitalizing on the Growing Automotive Finance Market.
White Paper Presented by Spireon Automotive Solutions
Walk into just about any auto dealership these days, and you’ll see something that was sorely missing
just a few short years ago: Customers. Not just car-shopping customers, but car-buying customers. To
Reacting to the subprime back-lash, lenders began to crack down on non-traditional loans. As with the
GoldStarGPS.com
or call 1-866-655-8825
Automotive GPS Solutions
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Preparing for the Down Cycle:
Follow the Smart Money
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3. 2A Closer Look at Today’s
Credit-Challenged Consumer
the car-buyer with the low FICO score is not your typical
defaulting on loans. Rather, increasing numbers of consumers
with damaged credit are among the millions of homeowners
who, drowning in underwater mortgages, were forced to walk
their credit ratings plunged. At the same time, so did their
Debt Obligation Ratios.
payment-to-income ratios. These are people who had their
mortgage payment, and they’re actual income has not
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their credit scores may indicate, the growing majority of these
consumers remain responsible members of the middle class.
debt, and for the most part pay their bills on-time.
And yet, these same bill-paying, gainfully employed
again starting to offer more subprime auto loans options.
Despite what their low credit scores
may indicate, the large segment of
credit-challenged consumers remain
responsible members of the middle
class. They have good jobs, earn
decent salaries, have lowered their
debt, and for the most part pay
their bills on-time.
Automotive GPS Solutions

4. 3 The Rebirth of Subprime
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This trend was already off to a strong start in 2012, particularly
hearing the word “yes.”
Automotive GPS Solutions
“the recession has not been fully released and will continue to contribute
to auto sales growth as these consumers get access to credit.
”– say analysts.3
borrowers with low scores were
“YES.”

5. Automotive GPS Solutions
4Lenders Go Deep
indicates that lenders across all segments of the industry are
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lending to consumers with 550 credit scores and lower. At the
While not as drastic, this same trend applies for used-car
in deep subprime lending, a 2.7% increase in subprime lending,
super-prime lending.
non-prime, subprime and deep-subprime show a combined
continue to decline.
subprime and deep-subprime show
.
Deep
Sub-
prime
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
30.9%
11.5%
5.1%
0.0%
Subprime
-3.5%
Nonprime Prime Super
Prime
YOY Change in New Financing
YOY Change

6. 5 Competing on Terms,
Rates and Payments
5
that’s ready once again to compete.
1
1
The question remains:
.
Automotive GPS Solutions

7. 6Subprimes Up,
Delinquencies Down
When you look at what happened to the housing market, sub-
“I suspect that what is being called subprime today is nothing
like the subprime of old,” says Manheim chief economist
Tom Webb.1
And he may be onto something. According to industry data,
today’s consumers with subprime auto loans are making
on-time payments a priority. What’s more, longer payment
periods are allowing consumers to maintain lower payments
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that the auto-loan default rate hit a record low of 1.01% in July
2012, down from 1.11% in September of the same year.1
Automotive GPS Solutions
Longer payment periods are allowing consumers to maintain lower
payments for extended periods of time. As a result, lenders are seeing
fewer delinquencies and a steep fall-off in repossessions rates.
2.80%
2.78%
2.76%
2.74%
2.72%
2.70%
2.68%
2.79%
2.72%
30-Day Delinquencies
-2.28 BPS
DECLINE
1.60%
1.55%
1.50%
1.45%
1.40%
1.35%
1.58%
1.43%
Credit Union Delinquencies
-9.76 BPS
DECLINE

8. 7
Automotive GPS Solutions
The year 2012 represented the best
used-car sales since 2007, with 40.5
million units being driven off the
lots, a 5% increase from a year ago.
Prices for vehicles up to eight
model years in age increased by 2.6
percent to an average of $14,445
in 2012
The percentage of used-vehicle
contracts with buyers having FICO
scores below 670 is at the highest
point since January 2010.
Driving the Value of Vehicles
Credit-challenged consumers with subprime auto loans are
lots. That’s up 5% since 2011, which saw 38.8 million units sold.
-
The fact is:
recession tended to hang onto their cars for longer periods.
2007, in the lead-up to the recession.
This increase in demand is also working to ratchet up the
January 2010.7
-
monthly payments. Lenders must stop and ask themselves:
Will credit-challenged consumer be able to sustain these
an increased likelihood of defaults on these larger subprime

9. 8The Perfect Storm?
Increasing numbers of deep subprime and subprime loans.
On the surface, it all sounds like welcome news for the industry
Which leads us to wonder: Is
Whether that storm hits one year from now or 10, our industry
must take the appropriate measures today to prepare for its
of the opportunities and the potential pitfalls in the current
smartest players are already taking precautions to safeguard
again turn turbulent.
Automotive GPS Solutions
Never before factors
descend upon the .
A recent study reveals that over 80%
of consumers who had embedded
telematics solutions stayed on track
with their payments, and many of
these saw an improvement in their
overall credit rating.

10. 9 Preparing for the Storm
identify poorly performing auto loan pools.2
subprime loans in an effort to compete.
assessing and offsetting risk factors that can impair the performance of their auto loans.2
As part of this increased due diligence, some lenders are employing more stringent stipulation
Automotive GPS Solutions
“ aggressive buying practices and reducing
loan quality
monitored and is unsustainable in perpetuity.
” 2

11. 10GPS Collateral Management
System (CMS): A Secure Strategy
Among lenders using Spireon’s GoldStar CMS:
Automotive GPS Solutions

12. 11 Best Practices for
Choosing the Right CMS
Real-Time Tracking
Ease of Use
dashboards and easy-to-use web-based interfaces.
Scalability
Stringent Security
Cloud-Based Simplicity
a cloud-based remotely hosted CMS you can access through the web.
Robust Reporting
More than raw data, your CMS should connect you to actionable, easy-to-understand business
Integration Ready
Make sure your CMS is ready to integrate with your current and future portfolio management systems
and other third-party applications.
Payment Alerts and Notices
Automotive GPS Solutions

13. 12
Automotive GPS Solutions
Best Practices for Choosing the Right CMS (Continued)
Disable Feature
High Availability
Installation Services
24/7 Support
Powerful Platform
Spireon.com
Increase loan originations and bulk purchases of commercial loans
Protect your assets
Cut costs associated with repossession and skip-trace

14. Automotive GPS Solutions
Spireon Delivers Best
Practices in CMS
To meet this checklist of best practices, more members of the
-
scalable, reliable and secure NSpire M2M Intelligence
Platform. These solutions include LoanPlus CMS designed to
meeting the needs of more credit-challenged customers.
Engineered from the ground-up, the NSpire Intelligence
Platform supporting these solutions connects members of the
need to reduce risk, enhance portfolio performance, control
A private cloud-based
environment, NSpire currently supports 1.5 million subscribers
and counting with:
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Instant access to real-time information
Supreme scalability for growing demands and changing needs
Spireon.com
GoldStarGPS.com, and LoanPlusCMS.com.

15. Summing it up
The industry’s smart players are implementing strategies now to safeguard their collateral, assets and
SOURCES
.
Automotive GPS Solutions
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16. Leading Provider of GPS Tracking Devices
Call us today at: 1-866-655-8825 or visit: GoldStarGPS.com
17600 Gillette Avenue, Suite 100 . Irvine, CA 92614
Learn more about Spireon, Inc. – Spireon.com