Universal’s industry expertise and insight has been applied across the entire design of its subprime auto lending program, resulting in a standardized process for evaluating risk in SAF portfolios. This process allows Universal to manage loan performance from beginning to end, producing cost efficiencies and delivering a predictable level of risk and reward.

The turnkey Universal program incorporates essential elements that reduce risk, increase efficiency and make subprime financing as easy as prime for financial institutions and investors, auto dealerships and special finance customers.  These advancements have opened participation in the SAF market to financial institutions and investors without the traditional costs for product development, underwriting, servicing, collections and remarketing. The comprehensive Universal model also offers competitive strength through built-in liquidity options. 

Universal Capital Development

The Universal Capital Development system is the means by which Universal generates lending capital for SAF loans..  This diversity in sources of lending capital creates increased stability in funding levels and reduces the risk of external market fluctuations in capital availability.  Although the source of capital for each of the funding platforms is different, the loan operations that are implemented to develop and manage the portfolios are the same. Universal offers three options for a variety of types of investors to become involved in this market.

The SAF SERIES1™

Universal’s initial method of delivering SAF loans is the SAF SERIES1™, consisting of Special Auto Finance portfolios of closed-end vehicle installment purchase contracts.  Community banks allocate up to approximately 25% of the Tier One Capital and make loans that are on their balance sheet. Each bank receives loans generated through Universal’s national network of dealerships, which generates geographic diversity in the portfolio. The combination of these elements and the uniqueness of the SAF SERIES1™ product results in a projected IRR in the range of approximately 8% to 10%, as independently forecasted by Bates White, LLC.

The Dealer Direct Finance Program

Universal also offers its SAF lending program, through the patent-pending Dealer Direct Finance program (“DDF” or the “Program”), to qualified auto dealership owners (“Owners”).  Universal invites select dealership owners or their assignees to join this exclusive group.   Through this first-of-its-kind Program, the Owner not only generates significant yield from a portfolio of high quality special auto finance loans that are owned by its own captive finance company, but also improves his/her dealership’s subprime auto sales volume and profitability and controls the amount of available subprime financing.

The patent-pending DDF program is the first of its kind to offer a complete turnkey captive finance program to qualified auto dealership owners. This captive finance company is set up as a Special Purpose Vehicle (SPV) that is owned by the dealership Owner.  The SPV only finances loans that came from its affiliated dealerships. Universal’s Dealer Direct Finance gives the SPV owner control over the volume of its special auto finance sales. This level of control, in combination with Universal’s underwriting and portfolio management expertise, produces high performing portfolios that have been independently forecasted by Bates White, LLC to generate significant yield and cash flow ranging from approximately 18% to 26% IRR when the equity holder's position is leveraged at a 3:1 ratio.

The Program is designed to provide a customized, managed risk, subprime lending program that is cost effective, simple to implement, and performed by industry leaders.  Using a combination of custom policies and procedures for Special Auto Finance (“SAF”) lending, also known as subprime lending, and a network of partners that are industry leaders, the Company builds and manages high performance DDF portfolios of special auto finance loans generated by the dealership(s). 

Universal Capital Partners

Universal Capital Partners is a single special purpose vehicle (SPV) that offers a fund designed to attract institutional investors, both national and internationally, such as pension funds, hedge funds, fund to funds, family funds, and endowments. The structure of the SPV will be very similar to the Dealer Direct Finance program, with a debt/equity ratio of 3:1 leverage. This program is projected to generate a comparable IRR to the DDF program at a range of approximately 18% to 26%.  These projections have also been independently forecasted by Bates White, LLC.

For more information, please contact:

Betty Ann Habig

VP of Client Developement

303.773.4250

BHABIG@UNIVERSALSAF.COM