In today’s suburban world, a car is almost a need, not a want. So, with that in mind, having reliable transportation is of the utmost importance to a huge number of Americans. The problem is an ever-increasing number of consumers do not have the money in savings to outright buy a car at any given moment. While some of these people secure their own financing through banks or credit Unions, there’s also a large number of un-banked buyers, too. So, with that in mind, companies like Consumer Portfolio Services step in to buy out contracts from dealerships and provide financing options to the consumers.
This independent finance company specializes in indirect auto financing for individuals with sub-par credit, low incomes or short credit histories. They buy retail installment car or truck contracts on used vehicles. While they sometimes participate in newer car purchases, it’s to a much lesser degree, instead, putting an emphasis on late-model used cars and trucks. Starting in 1991 and looking forward to June of 2019, the firm has purchased nearly $16 billion in contracts, servicing 177,000 customers and over 1000 employees in various branches across five states. The firm works with dealerships in all 48 contiguous states and is traded on NASDAQ under the symbol CPSS.
So, what consumer can be helped by such a firm? Who is their target audience?
In today’s market, most consumers are emergency away from needing to file bankruptcy, with credit scores below 500. With that in mind, CPS helps these types of shoppers find the financing they need on a car, and not just any car either. What good is an early model car that has a high repair bill to those who are already financially strapped? Instead, with liberal financing terms, these financiers are able to encourage late model car purchases. What good news for consumers.
Those with low incomes are hit with double whammies. They often have little money for a down payment saved up and they can’t afford high payments. That’s where companies like CPS can step in and give them longer payoff times that drive down the payments.