Automobile Loan Protection is a
risk management program that enables lenders
to increase loan volume and finance income on direct
and indirect loans. Additionally, Loan Protection
improves loan yield and profitability by
significantly reducing losses on repossessed
Loan Protection purchases
repossessed vehicles based on guaranteed vehicle
values less collision damage, mechanical defects, or
excess mileage. Purchase offers are consistently
higher than auctions or re-marketers. To further
reduce deficiency loan balances, the program
provides principal balance reduction payments to a
maximum of $5,000.
- Lenders make all loan approval
- Lenders recover 90% to 100% of the
Loan Protection fee on direct loans by
increasing the interest rate 1.5%.
- Lenders recover 100% of Loan
Protection fee on indirect loans by short
funding the dealer.
- Loan Protection provides 60% to 80%
reduction of deficiency balances on repossessed
- Loan Protection available on vehicle
purchase prices from $1,000 to $80,000 and loan
terms from 1 to 8 years.
- Loan Protection is applied to both new and
used cars, trucks, and vans with maximum
protection of NADA retail on used vehicles or
MSRP less rebates on new vehicles.
- Refunds provided on paid-off loans.
- Automobile Loan Protection is administered
by Lenders Option Corp. (LOC) - Shreveport, LA
Example of bank loan policy:
- C, D, and E tiers (18 months or more on
- Debt-to-income ratio exceeding 35%
- Loans with LTV of greater than 80%
- Minimum previous high credit limit of $2,500
- Maximum delinquency of four 30 day or three
60 day within last 2 years
- Maximum $500 charge-offs, collections,
judgments, etc. in last 2 years
- Previous bankruptcy with 2 years
Web-based form completion
Banks complete Interim Order form
at LOC's website on loans selected for Loan
Protection. Website provides a monthly billing and
an archived billing.
Comma delineated file for data
Comma delineated file may be
emailed rather than completing Interim Order form at
LOC's website. A monthly billing is e-mailed to the
Web-based claims processing
- Banks complete Notification form and Option
Call form at LOCís website. Forms provide
vehicle location and loan information.
- LOC assigns a condition report on the
repossessed vehicle and completes a purchase
offer for the vehicle. The principal reduction
payment is also completed at LOCís website.
If LOCís offer for the
repossessed vehicle is accepted, LOC emails a bank
draft envelope with instructions to transfer title
to LOC. The bank receives an official bank check as
payment for the vehicle and the principal balance
reduction payment. The entire process should be
completed within three to four weeks.
If LOCís offer for the
repossessed vehicle is rejected because a higher
offer is received, LOC will calculate the principal
balance reduction payment using the higher offer.