SameDay Auto Finance is automating more of its origination and servicing processes after switching to a new loan servicing system earlier this month.
TheIrving, Texas-based subprime lender signed on with auto lending software provider Nortridge on June 1, Armando Hidalgo, director of servicing, told Auto Finance News, a sister publication to Bank Automation News. SameDay tested the NLS auto loan servicing software for a few months before launching, he said, adding that SameDay was looking for a loan servicing system that would improve the processes of making calls, documenting accounts and taking payments.
Hidalgo said NLS allow SameDay to automate previously manual processes such as:
- Scorecards;
- Account reviews;
- Report generation;
- Tracking repossession inventory and assignments; and
- Vendor management.
“I love the automation that it’s going to be capable of,” he said. “Before, it was so labor intensive and [we had] to do a lot of workarounds.”
The new platform also automates front-end processes such as loan onboarding, Hidalgo said.
“Everything was so dependent on human interaction. Here it’s not,” he said, adding that automation saves the team hours in labor.
The scalability of the software allows for seamless growth as SameDay picks up origination volume, Hidalgo said.
“It’s scalable, which is what we’re looking for,” he said. “We can have multiple clients on it and scale as far as volume. It handles it very well.”
Smart growth
Down the road, SameDay plans to bring on a servicing platform to automate additional processes across consumer communications, loan management and servicing, Hidalgo said.
“We’ve got all the right tools for scalability,” he said. “We want to be careful with how we grow. We’re going to grow slow but smart.”
SameDay’s originations increased 23% sequentially in May, Hidalgo said, without providing specifics. SameDay’s portfolio sat at about $20 million as of December 2023, Hidalgo previously told AFN.
“The number of deals and the amount of money that we’re financing is pretty consistent,” he said. “We’re not growing fast but our delinquency numbers are declining.”
SameDay adjusted its lending program last year to account for rising losses, including revising payment-to-income (PTI) and debt-to-income (DTI) parameters. The “root cause” of upticks in delinquencies and losses were due to the prior lending program under which SameDay was originating loans, Hidalgo said.
“When we readjusted our program, we went from an average of a 480 credit score up to the 620 to 640 range,” he said. “Now we’re seeing it trend back to between 530 and 550. … Our program made a difference of saying we can scale back because before we were doing European cars, big trucks, big money there. We went back to basic transportation.”
SameDay has adjusted to financing assets that subprime borrowers can afford and that used-vehicle dealers are looking for to meet subprime consumer demand, Hidalgo said, adding that the lender is looking closely at DTI and PTI ratios.
“With credit scores migrating back and forth, we are originating tighter. We’re focused on more of the dealer performance in their loss rates,” he said. “… We skyrocketed into the over 600 [credit score] and now it’s coming back, but we’re not seeing the losses that we were seeing before because it’s better managed.”
Editor’s note: This article first appeared on Auto Finance News, a sister publication to Bank Automation News.
