This document discusses using collateral data like vehicle values to enhance risk-based auto loan pricing. It notes that traditionally, maximum loan-to-value (LTV) amounts are determined by credit tier, vehicle year, and mileage, but vehicle values can vary significantly within those categories. Two examples show how different vehicles with the same loan terms achieve a positive equity position at different times. The document advocates appending collateral value data from sources like Black Book to improve pricing, collections strategies, refinancing decisions, and portfolio analytics. It provides an example of how this data can be integrated and displayed within a loan origination system like defi.

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The Power and Value of
Integration

3. Using Collateral Data to Enhance Risk Based Pricing
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Traditionally LTV amounts are determined via:
• Credit Quality Tiers
• Year Model Tiers
• Mileage Ranges
Should every 2010 model, within the same credit tier, have a Max LTV to be exact same?

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Risk Exposure by Vehicle
Not all Vehicles Depreciate Alike
• Vehicle “A” and Vehicle “B” are based on the exact
same loan terms of 72 months, 5% interest and a
120% LTV
• Vehicle “B” achieves a positive equity position 15
months earlier than Vehicle “A”
• Knowing the potential loss allows lenders to become
more competitive with their portfolios while
mitigating risk

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$20,160 @ 9%, 60 month term @ 120% LTV
25,000 @ 9%, 60 month term @120% LTV
Date Balance Month Residual Value LTV Equity
Mar. 2015 $20,160 0 $16,800 120% ($3,360)
Mar. 2016 $16,366 12 $13,200 124% ($3,166)
Mar. 2017 $12,456 24 $10,875 115% ($1,581)
Sept. 2017 $10,457 30 $10,125 103% ($332)
Mar. 2018 $8,428 36 $8,875 92% $696
Sept. 2018 $6,368 42 $8,775 71% $2,506
Mar. 2019 $4,277 48 $7,275 59% $3,002
Date Balance Month
Residual
Value
LTV Equity
Mar. 2015 25,000 0 $20,750 120% ($4,250)
Mar. 2016 $20,854 12 $17,350.00 120% ($3,504)
Mar. 2017 $16,320 24 $15,250.00 107% ($1,070)
Sept. 2017 $13,895 30 $14,250.00 98% $355
Mar. 2018 $11,360 36 $13,350.00 85% $1,991
Sept. 2018 $8,708 42 $12,400.00 70% $3,692
Mar. 2019 $5,934 48 $11,550.00 51% $5,616
Using Residual Values at Origination

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Auto loan records may all look the same however, knowing LTV throughout the life of
a loan will help separate “goods” and “bads”.
Credit
Score
Balance Time to
Maturity
Auto Equity
720 $8000 24 $5500
720 $8000 24 $3000
720 $8000 24 -$3500
Equity is directly correlated to delinquency, higher equity in a vehicle the lower the default rate, the
less equity in a vehicle the higher the default rate.

7. Preparing for Lower Recoveries
• Being aware of potential blind spots during periods of falling collateral values, “LTV Shock”
• Consumer “Strategic Default”
• How to Pinpoint Pockets of Severity Risk=Monitor Equity Levels
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Portfolio Value Appends
Appending collateral valuations is one of the most impactful ways to use vehicle data
Multiple Uses
• Improve Pricing
• Refine Collection Strategies
• Refinance, Extensions, Repo’s
• More Robust Portfolio Analytics
• Target Marketing
• Improve Loss Forecasting
• Internal and Investor reports

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Example of Raw Data File with “refreshed” Collateral Values

10. How defi makes it easy to
leverage BB data…
1. Show an application with BB value and LTV
2. Show how the value guide data is set and
pulled
3. Show a formula field that takes dealer
price/BB value and reflect it on the decision
page (PTV as an example of custom formula
options)
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11. defi allows you to map all your value data to the servicing system with
simple mapping options
• Show the mapping from defi to FISERV
• Show the options to send value at origination and the price to BB value
field (PTV)
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• Lower credit Tiers- Use as a 2nd opinion on the lowest credit tiers
• Certain Makes/Models- Vehicles that have historically led to higher losses
• Higher LTV’s- Look at multiple value guides, confirm exposure levels
• Exceptions/tight deals-Confirm the “right” decision is made
• Residual Values-Estimate expected collateral risk levels will be in 12-72 months
Best Practice-
With defi you can pull an alternate value guide data to refine your structure and/or
pricing, especially useful with:

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“We can’t afford it, it costs extra, it’s too much work to use it..
defi is already integrated with BB so there
is no additional costs to create the
connection to BB
Show demo on setting up access to BB
then show a demo of pulling BB after KBB
and NADA and show all values on one
page….use a 2012 Ford Fusion

14. Q & A TIME
???
Address questions sent in:
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15. For Additional Information Please Contact:
Brian Clegg
Lender Solutions Manager
Black Book | National Auto Research | Hearst Business Media
Office: 770-533-5209 | Mobile: 706-570-9344
1745 N. Brown Rd | Suite 130 | Lawrenceville, GA 30043
bclegg@BlackBookUSA.com
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16. For Additional Information or a complete demo of defi LOS contact:
Brice Beard
VP Sales
defi SOLUTIONS | Mobile: 817-781-5038
Grapevine, TX 76051
bbeard@defisolutions.com
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