Brought to you by. A New Residual-Based Financing Option Dealers can help customers greatly reduce their monthly payments with CarMark AutoFinance.

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A New Residual-Based Financing Option

Dealers can help customers greatly reduce their monthly payments with CarMark

AutoFinance

David RugglesManager

Bill ZadeitsModerator

CarMark Auto FinancePartnering with Lenders to Bring Residual Based Financing to the Late Model Pre-Owned

Vehicle Business.

Its All About the Monthly Payment!!!!

Auto Financial Group

THIS INFORMATION IS CONFIDENTIAL AND LEGALLY PRIVILEDGED. IT IS INTENDED FOR THE ADDRESSEE(S) OR AFG BROKERS THAT ARE UNDER SPECIFIC NON-DISCLOSURE AGREEMENTS. ANY DISCLOSURE, COPYING, OR DISTRIBUTING IS

PROHIBITED AND UNLAWFUL.

Agenda

Residual Based Financing Low Payment Option –

A “Walk Away” Balloon Program:

- Auto Financial Group (AFG) Overview and the relationship with CarMark

- Opportunities:- Late Model Pre-Owned – the sweet spot and focus for CarMark Auto

Finance - Challenge: To maintain enough “distance” between the monthly payment on

late model Pre-Owned vehicles to effectively compete with “subvented” payments on new vehicles to sell the Pre-Owned vehicles and maintain gross profit.

- AFG Calculator - Payment Calculations

- Competition - - Lease/Balloon terminology- AFG - What models work best and why

AFG/CarMark Alliance

CarMark, Auto Financial Group, and participating lenders have joined forces to bring Dealers access to a residual based financing product designed to lower monthly payments and increase customer loyalty to the Dealer and the Lender.

AFG Overview

• http://www.autofinancialgroup.com/

• Established in 1999, Auto Financial Group is one of the nation's leading sources of residual based finance products for independent lenders and credit unions.

• Auto Financial Group's unique program is similar to a lease, but the title of the vehicle remains in the owner’s name which provides many advantages. The program is a residual-based finance product (balloon) providing a low payment option without unnecessarily increasing term.

• At AFG, our mission is to provide innovative revenue producing products for financial institutions.

CarMark Finance Overview

An exciting new finance product brought to you by the Pre-Owned Auto Dealer Alliance, (POADA), Developers of CarMark Certified Pre-Owned.

www.carmarkcertified.com

Lease/Balloon/F&I Primer

Terminology:

• Disposition Fee (“Dispo”)

• Acquisition Fee (“Acq Fee”) Does Not Apply to a “Balloon.”

• Capitalized Cost (“Cap Cost”) Does Not Apply to a “Balloon.”

Lease/Balloon/F&I Primer

More Terminology:

• Residual – Guaranteed Future Value

• Percentage Residual

• Dollar Value Residual

Residual Based Financing

All “Balloons” are NOT created equal:• The CarMark Auto Finance/AFG balloon program is a true low

payment “Walk Away” balloon financing program with 12k, 15k, 18k options. $.10 over mileage charge.

• At any time during the loan or at loan maturity an owner can trade, sell, or refinance the vehicle.

• The Owner holds the title, no prepayment penalty, cheaper insurance.

• A 36 month term equals 35 monthly payments with a “Walk Away” option in lieu of making the 36th and final payment.

• At end of term, the Consumer holds all of the options. They can win, but not lose.

The AFG Calculator

http://secure.autofinancialgroup.com/AFG/login.jsp?CUID=99999

User Name = afg

Password = demo123

• Payments are lower than conventional financing because the member is only paying for the part of the vehicle they use, without increasing the monthly payment in an attempt to gain equity.

• How are AFG residuals calculated? Based on Automotive Lease Guide. The residuals are realistic while still being highly competitive.

AFG Calculator

Calculate some examples -

CarMark/AFG Research

• We have invested in a Lease/Balloon comparison tool that calculates competitive “Captive” programs for New and Pre-Owned vehicles that ranks the payments on the same screen for quick comparison.

• We regularly assist Dealers, in conjunction with Manheim Market Report information, to identify Pre-Owned Opportunities BEFORE the Dealer acquires inventory at the beginning of each 60 day ALG book period.

• “DEALER/CU ALERT” published at the beginning of each 60 ALG book period

ALG Residual Book Period SEPT – OCT 2012

YR/MAKE/Model RECENT SALES MILES WHOLESALE plus $2500

AFG RBF Conv. Fin48 mo 60 mo 48 / 60/72

2012 BMW X 328i 100+ 10,000 $41,100 $628 $578 $910/738/624

2011 Chevy HHR 1LT 235 38,000 $13,500 $212 $185 $299/243/205

2012 Chevy Impala 4 dr Sdn LT 258+ 22,000 $17,300 $356 $311 $486/395/334

2012 Chevy Tahoe 1LT 4WD 100+ 21,000 $37,500 $537 $486 $830/674/570

2012 Chevy Malibu 4cyl 1LT 100+ 22,000 $16,800 $236 $216 $372/302/255

2012 Chrysler 200 4 dr Sdn Touring 100+ 19,500 $17,500 $262 $236 $387/314/266

2012 Chrysler 3.5L T&C Touring 488 24,000 $23,000 $313 $294 $509/413/349

2012 Chrysler 300 3.6 Limited 100+ 15,000 $27,100 $374 $338 $600/487/412

2012 Dodge Charger 4dr Sdn SE 200+ 22,500 $21,500 $334 $302 $498/404/342

2012 Dodge Durango 4WD CREW V6 100+ 25,000 $28,000 $397 $364 $620/503/425

2012 Chevy Suburban 4WD LT 100+ 22,000 $39,000 $644 $562 $863/701/593

2012 Dodge Grand Caravan Crew FWD V6 300+ 25,000 $20,000 $266 $252 $443/359/252

2012 Ford Edge AWD CUV V6 LTD 100+ 24,500 $27,500 $365 $341 $608/494/418

2012 Ford Escape V6 4WD LTD 200+ 26,500 $23,600 $339 $311 $522/424/358

2012 Ford Mustang V6 CONV 140+ 27,500 $19,500 $257 $240 $432/350/296

2012 Ford Taurus V6 4 Dr LTD 100+ 24,600 $24,500 $338 $310 $542/440/372

2012 Jeep Grand Cherokee 4WD Laredo 100+ 21,000 $28,500 $389 $359 $631/512/4332012 Jeep Liberty 4WD V6 SPORT 100+ 22,000 $19,500 $308 $273 $431/350/296

2011 Lincoln Town Car Sig Ltd 204 29,000 $24,500 $367 $327 $542/440/372

2012 Nissan Altima S 4dr Sdn 400+ 14,000 $19,000 $272 $240 $420/341/289

2012 Ford Explorer 4WD LTD 100+ 20,000 $35,500 $512 $465 $786/638/539

2012 Honda Civic 4dr Sdn EX 100+ 12,500 $18,500 $241 $222 $409/332/281

2012 MB C250 4dr Sdn 50+ 11,000 $33,500 $408 $385 $741/602/5092012 Hyundai Sonata GLS 4 dr Sdn 300+ 27,000 $17,800 $256 $231 $394/320/270

2012 Toyota Camry LE 4 cyl 4 dr Sdn 100+ 16,400 $20,000 $263 $239 $443/359/304

Opportunities Based on Solutions

Dealership Pain Point #1

Dealerships are Crying for Pre-owned Inventory

• As we all know, we are in the middle of an extreme pre-owned inventory shortage, caused by the recent downturn in new vehicle sales. For a few years, there were few lease and daily rental vehicles put on the road. As a consequence, there are a fewer pre-owned vehicles available compared to the swelling demand caused by economic recovery. We went from a 17 million SAAR to a 10.5 million SAARs on new vehicles and from 45 plus million pre-owned down to around 38 million. Both new and pre-owned SAARs are on a strong upward trend with the market expected to produce over 14 million new vehicle sales this year. In other words, demand for pre-owned is rising briskly but the supply is still weak. Most experts think this situation will be with us for at least 5 more years. Further, people are keeping their vehicles longer.

Dealership Pain Point #2

• Dealers are always interested in doing business with the customers more often by shortening term and increasing consumer loyalty.

Opportunities Based on Solutions

• Using the CarMark Auto Finance program to shorten terms, Dealers can organically “grow” their own “pedigreed” pre-owned inventory while doing business with their buyers more often.

Opportunities Based on Solutions

Consumer “Pain Point”

• Monthly Payment

• Monthly Payment

• Monthly Payment

OR “How can I drive more vehicle for the same monthly payment?

Solution!

CarMark Auto Finance payments are up to 40% lower than conventional finance payments.

Opportunities Based on Solutions

The CarMark Auto Finance “Walk Away Balloon Financing Program” addresses the Dealer “Pain Points” while ultimately addressing the Primary “Pain Point” of Auto Buyers, the monthly payment.

How can a Dealer get on the program?

Provide Contact Information and we will match Dealers with participating lenders where possible and/or guide the Dealer through the process of bringing his/her favorite lender into the program.

We will be contacting each of you who have questions we were not able to get to during our webinar.

Contact InfoAuto Financial Group welcomes the opportunity to further discuss how your credit union can become a part of the rapidly growing and profitable residual based financing market.

Contact:

Richard Epley, CEO(877)354-4234, Ext 100 repley@autofinancialgroup.com

Kati Knowland, Special Projects Manager

800.608.7500 ext. 134

kknowland@sacherokee.com

Dave Ruggles, Vice President, Indirect Lending Initiatives(312)925-1863druggles@autofinancialgroup.com

Thank you for your interest in the CarMark Residual Based financing program!

David RugglesManager

Bill ZadeitsModerator

www.carmarkcertified.com

TWO Flexible Warranty Options:

Available for current model plus 5 years!

• 12/12,000 LW for cars with 0-100,000 miles

• 72/100,000 LW for cars with 0-60,000 miles

(800) 628-4635dealerinfo@carmarkcertified.com

www.carmarkcertified.com

Register Now!

November 12-16, 2012

The Phoenician Resort

Scottsdale, AZ

www.usedcarweek.bizmmcquilkin@autoremarketing.com

800.608.7500, ext. 143

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More InformationBill Zadeits

Managing Directorbzadeits@poada.b

iz

www.poada.biz/join

800-608-7500 ext. 117

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