Direct Lending Vs. Indirect Lending. I want to give you a scenario and have you tell me if it is direct or indirect lending.
1. Consumer submits loan application (income, creditworthiness, price, etc…) to dealer/retail business
2. Dealer/retail business submits loan application information to lenders, and my bank is chosen as the lender
3. Manufacturer offers potential dealer/retail business compensation (such as incentives)
4. Lender sets note rate for consumer, and dealer/retail business closes the sale
5. Lender funds note via ACH to dealer/retail business account.
6. Lender produces and owns the contract paper and services the loan completely, including any collection activity that might occur. This is all in accordance with the agreement the dealer/retail business has with us as the lender.
7. If the dealer/retail business can’t sell the item within a specific period of time governed by the terms, the manufacturer will pick up and pay the item off.