Lenders say they’d like to know if vehicles they give advances for will go to work in the ride-sharing industry.
LAS VEGAS – If someone finances a purchased vehicle to use as an Uber-mobile, lenders would like to know. That doesn’t mean they will.
“It’s becoming an issue,” Melinda Zabritski, credit-tracker Experian’s senior director-automotive financial.
She tells of attending a meeting during which bankers expressed dismay at not knowing if purchasers of cars they financed intended to put lots of miles on them working for ride-sharing companies such as Uber and Lyft.
“There are hidden risks,” John Hyatt, head of U.S. Bank’s indirect lending, tells WardsAuto at the American Financial Services Assn.’s annual Vehicle Finance Conference tied to the National Automobile Dealers Assn. convention here.
It’s not an issue if an Uber driver conscientiously pays off the loan. In such cases, a lender has no vested interest in what the vehicle is used for. The problem kicks in if a ride-sharing worker defaults.
That’s of particular concern to lenders because a repossessed ride-sharing vehicle is worth less than normal due to heavy use and high mileage. It hurts a bank’s mitigation of losses in reselling the repossessed vehicle.
“Buyers at auctions pay less for commercial vehicles with lots of mileage on them,” Hyatt notes.
Lenders who finance the purchase of taxi fleets at least realize what borrowers intend to do with those vehicles. It’s less clear with ride sharing. “You don’t really know people have those jobs,” Hyatt says.
Sometimes you do, and it doesn’t mean Uber drivers are persona non grata at dealerships. Castle Auto Group’s Joe Castle puts out the welcome mat for them.
“We are in Chicago and it has 50,000 Uber drivers,” he says at the finance conference. “I have a ton of experience selling (Chevrolet) Tahoes and (GMC) Yukons to Uber drivers. I love it. It’s a nice niche business for us.”
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Author: Josh Vajda
Josh Vajda is Director of Inside Sales for AutoUSA. Previously he held senior management positions with AutoNation, where he led the auto retailer’s efforts in training and development, customer satisfaction and sales operations. Josh holds a B.S. in Business Management and Marketing from Cornell University, and is passionate about community involvement. He is a member of Leadership Broward and has held board and advisory positions with the Make-a-Wish Foundation.