GAINESVILLE, Ga.-Black Book has introduced a new risk score to help financial institutions better manage risk within the used car loan portfolio.
Called the Black Book Risk Score, the new tool helps banks and credit unions understand the risk associated with the make, model, year, and condition of the used car being financed.Ricky Beggs, VP and managing editor of Black Book, said the score allows lenders to make better decisions when granting a loan and repossessing cars, creating collections models, and loss forecasting. "If the choice is to repossess a couple cars, you can determine which one is better to get off the books now.
"Financial institutions pay a monthly fee to access the risk score data, and Black Book e-mails a report at the financial institution's request. Beggs would not disclose the monthly cost, but said it varied based on the auto loan portfolio size.
"The Black Book Risk Score takes a comprehensive look at a multitude of macro, micro, historical, and projected factors to rank-order vehicles between -150 and 150 with regard to their potential collateral risk," said Beggs.
Factors the score addresses include:
* Historical and recent depreciation curves and trends
* Forecasted residual values
* Auction survey data on vehicle conditions and expected mileage
* The real impact of adds and deducts on a vehicle's values
* Gas mileage efficiency by vehicle* Fleet and lease usage by vehicle
* Macro-economic conditions and their effect on vehicle values
