Flagship takes a “cautious approach” to automated approvals.

Flagship Continues to Reduce Loan Terms, Latest ABS Shows

August 24 2017 | Chadds Ford, PA

Flagship Credit Acceptance continues to reduce loan terms, according to Kroll Bond Ratings Agency’s latest ABS presale report.

Flagship began originating 75-month loans and 78-month loans in 2013. However, starting in mid-year 2016, Flagship started to reduce the percentage of its loan terms greater than 72 months to just under 2% of total originations, from approximately 5% in prior years, according to the presale. As of July 30, Flagship only has 1.8% of these longer term loans, compared with 1.5% in the lender’s previous transaction.

Flagship’s latest securitization — Flagship Credit Auto Trust 2017-3 — is a $185.2 billion transaction backed by subprime auto loan receivables. The weighted average Fico score is 597, up from 595 in FCAT 2017-2, according to the report. This transaction includes loans originated from both the Flagship Credit Acceptance and CarFinance Capital LLC branded origination channels, according to the report.

Amid heightened regulatory scrutiny where Department of Justice subpoenaed several subprime issuers — including Flagship and subsidiary CarFinance Capital LLC — regarding past originations and securitizations, Flagship is maintaining a “cautious approach” to automated approvals with approximately 2% of the applications that were not auto-declined being auto-approved, the report said.

Separately, starting in May, Flagship began using direct refinance scorecard 2.0 for the direct lending program that is originated through CarFinance.com. Flagship is also investing in an automated approval system, which the lender has tested since the beginning of the year, according to the report.

At midyear, Chadds Ford, Pa.-based Flagship and CarFinance had 828 employees, and a managed portfolio of approximately $3 billion; it originated approximately $398 million in the first half of 2017, down from $868.4 million over the same period in 2016.

About Flagship Credit Acceptance

Flagship Credit Acceptance LLC ("Flagship"), headquartered in Chadds Ford, Pennsylvania with offices in Irving, Texas, Phoenix, Arizona, Irvine, California and Indianapolis, Indiana, helps credit-challenged auto shoppers secure financing through partnerships with primarily franchised auto dealers and through its direct lending site, CarFinance.com. Flagship Credit has successfully grown its portfolio to $2.9 billion in managed receivables. The Company currently purchases indirect auto contracts from a nationwide network of over 9,400 dealers and originates direct to consumers in 46 states.

Fair Lending Policy

Flagship Credit Acceptance, LLC ("Flagship") is committed to maintaining a culture of fair credit throughout the organization. In this regard, Flagship has developed a Fair Credit Program ("Program") that complies with all applicable fair credit laws and regulations ("FC Laws") and reflects industry best practices. Flagship is committed to comply with the letter and spirit of FC Laws. The goal of the Program is to carry out Flagship's commitment and be recognized internally and externally (e.g., by management, associates, customers, service providers, and the public) as dedicated to fair credit principles and demanding of compliance. The Program applies to all aspects of Flagship's operations (including reviewing, purchasing and servicing retail installment sale contracts whether for itself or others) and all services offered by Flagship, and across all of Flagship's credit operations, including marketing, underwriting, origination, processing, servicing, collection, loss mitigation, and payoff activities, and to all personnel who work for or on behalf of Flagship, whether as associates, officers, members of the Board of Directors, agents, representatives or service providers.

Should you have any questions about the details of any of Flagship's policies, please contact us at 1.800.900.5150 M-F, between 9:00 a.m. and 5:00 p.m. EST.

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Our Lending Philosophy

A borrower is more than just a credit score. At Flagship, we focus on the story behind the customer …and look beyond the number.

Life happens. Whether low credit scores are a result of past circumstances, one-time events or just bad luck, Flagship offers multi-tiered pricing structures to finance borrowers across the credit spectrum.

At Flagship we believe a borrower’s credit past shouldn’t dictate their future.

Many borrowers need a second chance. We recognize the vast majority of persons with credit challenges are working hard to re-establish their credit rating. Each of our Credit Analysts are trained in "common sense" lending, a philosophy of reviewing all the circumstances and determining the appropriate deal structure for the specific borrower situation. Flagship maintains a very high standard regarding  Fair Lending compliance, ensuring our customers are always treated professionally and consistently.

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