nov2011independentdealer

November 2011 — Independent Dealer — 1 www.fiada.com

SINCE 1940

A Publication of theFlorida IndependentAutomobile DealersAssociation

November 2011 www.FIADA.com Information and Insight for Florida Used Car Dealers

PRST STDU.S. POSTAGE

PAIDFULTON, MO

PERMIT NO. 38

2 — Independent Dealer — November 2011 www.fiada.com

NOVEMBER 2011

Nov. 3-4 Orlando/Winter Garden

Nov. 5-6 Tampa

Nov. 7-8 Ocala

Nov. 9-10 Miami/Opa Locka

Nov. 12-13 Orlando

Nov. 14-15 Clearwater

Nov. 16-17 Lakeland

Nov. 19-20 Ft. Lauderdale

Nov. 21-22 Jacksonville

Nov. 21-22 Tallahassee

DECEMBER 2011

Dec. 1-2 Orlando/Winter Garden

Dec. 3-4 Tampa

Dec. 5-6 Ocala

Dec. 7-8 Miami/Opa Locka

Dec. 10-11 Orlando

Dec. 12-13 Clearwater

Dec. 14-15 Lakeland

Dec. 17-18 Ft. Lauderdale

Dec. 19-20 Jacksonville

Dec. 21-22 Tallahassee

January 2012

Jan. 5-6 Orlando/Winter Garden

Jan. 7-8 Tampa

Jan. 9-10 Ocala

Jan. 11-12 Miami/Opa Locka

Jan. 14-15 Orlando

Jan. 16-17 Clearwater

Jan. 19-20 Lakeland

Jan. 21-22 Ft. Lauderdale

Jan. 23-24 Jacksonville

Jan. 25-26 Tallahassee

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DealerIndependent

MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308 TELEPHONE (850) 385-2712 (800) 237-0448 FAX (850) 385-3251 WEBSITE www.FIADA.com

EXECUTIVE COMMITTEE Brandi Noegel President

Christopher Leedom Senior Vice President

Jim Kagiliery Chairman of the Board

Dino Mercurio Secretary

John Cousins Treasurer

David Cox, CMD Regional Vice President

Frank Fuzy Regional Vice President

George Hickey Regional Vice President

Steve Marbais, CMD Regional Vice President

Paul Matton Regional Vice President

FIADA STAFF Lisette Mariner Executive Director

Terry Myers Educational Instructor

Sarah Langley Administrative Director

Alex Romans Education Director

Christy Taylor Editorial/Advertising

POSTMASTER:Send address changes to

FIADA • 1840 Fiddler CourtTallahassee, FL 32308

(850) 385-2712 • Toll Free: (800) 237-0448Fax (850) 385-3251 • www.FIADA.com

The Independent Dealer is a publication of:Florida Independent Automobile

Dealers Association,1840 Fiddler Court, Tallahassee, FL 32308

The magazine is published every month inTallahassee and distributed to Florida new,used, wholesale and lease/retail car dealers.Advertising rates are available upon request.

The statements and opinions expressedherein are those of the individual authors

and do not necessarily represent the viewsof Independent Dealer or the Association.

Likewise, the appearance of advertisers, or theiridentification as members of FIADA, does

not constitute an endorsement of theproducts or services featured.

ContentsNovember 2011

For members of the Florida Independent Automobile Dealers Association

C O LU M N S & F E AT U R E S

4 President’s Message Brandi Noegel

6 Executive Director’s Message Lisette Mariner

8 Member News New, Renewing and Rejoining Members

10 A Shining Example of Quality Live Oak dealer Michelle Graudins is FIADA’s Quality Dealer of the Year

14 Auction Person of the Year: Jay Cadigan Manheim’s Market VP wins for support of independent dealers

18 Convention 2011! A pictorial recap of FIADA’s biggest event

29 FIADA’s Executive Committee Introducing the new slate of officers for 2011-2012.

30 Industry News

CONGRATULATIONS WINNERS!FIADA Awarded these honors at the Annual Convention.

See pages 18-24 for photos from the events.

Quality Dealer of the Year, Michelle Graudins

Man of the Year, Frank Fuzy

President’s Award, Jim Kagiliery

Auction Person of the Year, Jay Cadigan


F R O M T H E P R E S I D E N T

What I Learned at the FIADA ConventionBY BRANDI NOEGEL

Ihave just attended a conference and our 2011 FIA-DA Annual Convention. Both were a lot of fun and educational. We had over 54 vendors and a lot of

great sponsors at the 2011 FIADA Annual Convention. It would not have been a great convention without them. Many of them conducted education classes that were of great help to our business. If you were not able to attend, I hope you will try to make one of our Town Hall training sessions coming in 2012. The next Town Hall will be in Daytona Beach at Manheim Daytona Beach on Friday January 20, 2012.

At our convention, one of our speakers was Deputy Director Boyd Walden from the Department of High-way Safety and Motor Vehicles, Division of Motorist Services. He spoke on many things that have changed in our industry, including the scope of his department. The Division of Driver’s Licenses and what we know as the Division of Motor Vehicles have been combined into one department. Boyd also talked about ongoing concerns with Curbstoning Enforcement. In case you are interested, the Provisions of Law on Curbstoning can be found in section 316.195 of the Florida Statutes. According to statute, the definition for “curbston-ing” is a term used to describe the practice of parking a vehicle in an area upon a public street, highway, a public parking lot, or public or private property where the public has a right to travel by motor vehicle, for the purpose of and intent of displaying the vehicle for sale, hire or rent.

Another insightful session was Steve Gordon’s “22 Simple Actions You Can Take Today to Position Your Business for Breakthrough Growth.” He spoke about many things that can have an impact on your business

and are very easy to do. One in particular was to make contact with people more than one time. In fact, you must keep making contact. You may have to “touch” someone multiple times before they decide to purchase a vehicle or give you a referral. One way to do this is to send out mailers, for instance, five times a year. The mailers could be anything from an explanation of why a customer would want to buy from you to something as simple as a birthday card. It is important to note that Steve suggested this mail media should not be in the form of postcards, but rather in an envelope which is more likely to be read. The idea is to be the first dealer people think of when buying a new vehicle or giving a recommendation to a friend.

At another one of my volunteer jobs, I read an article about Governor Rick Scott’s 2012 Job Creation and Economic Growth Agenda. The top two things on the report were: 1. Streamlining business, permitting and elimi-

nating burdensome rules and regulations. 2. Providing tax relief and reform for Florida

working families and business.

We can all agree that we need this right now; so, let’s hope that it will be a great legislative session. As we all know business is not what it should be and we all are just holding on, waiting for things to get better. I hope that the tax season will be a great one.

Carol (Brandi) NoegelFIADA President


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E X E C U T I V E D I R E C T O R ’ S M E S S A G E

Who You Gonna Call?FIADABY LISETTE MARINER

We want you … to be an active participant. Your membership matters. Get the most of being a member by attending a quarterly

meeting, being part of a committee, and contacting the FIADA office when you have an issue.

The FIADA hosts, in many cases with the partnership of a local auction, quarterly meetings throughout the state. These town hall meetings are held the day before a board meeting and are a wonderful educational op-portunity. This is a great opportunity to network with colleagues and ask those burning questions you have of the experts. Your next opportunity is in Daytona on January 20-21. Visit the FIADA website at www.fiada.com to reserve your space.

The FIADA convention is another quarterly meeting to get involved. At the October convention I was able to meet and talk to many dealers. If you missed 2011’s convention, you also missed the induction of our new board of directors. With a new board also comes the opportunity to serve on a committee. Committees are a great resource for the Association. Through our committees and the board we accomplish the work of the Association to protect your interest and provide the best resources. Let me know if you’re interested in serving on the membership committee, member benefits committee or legislative committee. Express your interest by emailing me at [email protected].

FIADA’s mission is to protect the industry. One way to

accomplish that mission is to know what’s happening throughout the state. By contacting the FIADA office and expressing your concerns we are able to find solu-tions and ensure that your local issue does not set pre-cedence for other localities. You may remember that last year the Palm Beach County tax collector enacted procedures that would have added burdens to the deal-ers in the area. FIADA was able to stop this measure from seeing the light of day.

We monitor issues every day. Though the Florida Legislative session begins in January, many of the committees are meeting now. The Governor recently announced Florida has a $2 billion shortfall. We won’t

be asleep at the wheel. As legislators try to close the gap, we will ensure they do not fill it at the expense of our industry. The legislative committee is also review-ing ideas to correct the insurance inequity of leasing vehicles.

Take advantage of all the benefits of being a member. You have legal questions and need answers today. Just give us a call at (800) 237-0448. You have issues with curb stoners in your area. Just call and let us know. Be an active participant.

By contacting the FIADA office and expressing your concerns we are able to find solutions and ensure that your local issue does not set precedence for other localities.


HOTEL INFORMATION:Shores Resort & Spa2637 South Atlantic AveDaytona Beach Shores, FL

Reservations: 866-934-7467 Rate: $120/night


Rejoining MembersO C T O B E R 2 0 1 1

Autos of Palm BeachWest Palm Beach, FLJennifer SmithSponsor: NIADA Certified

Crazy Meghan’s Car SalesLongwood, FLJeffery MazerSponsor: FIADA Office

M E M B E R S H I P N E W S

New MembersO C T O B E R 2 0 1 1

A.R.A. GPS Systems, Inc.Newnan, GA Larry Carter Answer One Motors Tallahasee, FL Amy Sanford Sponsor: www.fiada.com

B & B Truck Corral Tampa, FL Sharon Alvis Sponsor: FIADA Office

Chip’s Used Cars Atlantic Beach, FL Harold Parman

Emset Enterprises LLCPalm Harbor, FLGary Vosselmann Sponsor: FIADA Office

First Leasing CorpMiami, FL Arsenio Moussa Sponsor: FIADA Office

Florida Credit UnioGainesville, FL Chessie Flanders Sponsor: John Cousins

Gray’s Automotive Palm Beach, FLBrett Gray Sponsor: FIADA Office

John Chidsey Fort Lauderdale, FL John Chidsey Sponsor: Terry Myers

Kiker U Pull It Pensacola, FL Hunter Kiker Sponsor: Kevin Scott

Liberty Jane InvestmentsOrlando, FL Nehir Benazar Sponsor: John Cousins

Manatee BuggyWorksBradenton, FL Terrell Nichols Sponsor: Manheim

Mega Auto Sales LLCTallahasee., FL Keith Sapp Sponsor: Kevin Scott

Robin RogersonWinter Haven, FL Sponsor: Terry Myers

Renewing MembersO C T O B E R 2 0 1 1

20+ Year MembersGoebel’s Used Cars, Inc. Ocala, FL

10+ Year MembersAuto Add-Ons, Inc. Tavares, FLAuto Brokers of Orlando Orlando, FLWilliams & Stazonne Insurance Cocoa Beach, FL

Under 10 Year MembersAllen Wholesale Auto Orlando, FLAmeriFleet Transportation Alpharetta, GAAuto Corral, Inc. Hudson, FLDaylight Auto Financing, LLC Panama City, FLEnterprise Rent A Car Coconut Creek, FLFlorida Dealer Consultants Miami Springs, FLIturan USA, Inc. Fort Lauderdale, FLKing Insurance Gainesville, FLNo. 1 Auto Sales, Inc. Hollywood, FLS.W. Motorsports of Bradenton Bradenton, FLSpeedway Pull-N-Save Auto Parts LLC Daytona Beach, FLTallahassee Salvage, Inc. Havana, FLTraditional Motorsports Lakeland, FL

Dan’s Deals On Wheels Auto Sales, Inc.Hollywood, FLMarjorie JaramilloSponsor: FIADA Office

Mattas MotorsPunta Gorda, FLTodd MattasSponsor: FIADA Office

NOW hIRING: MEMBERShIP RECRUITMENT AND RETENTION COORDINATORFIADA is currently seeking a Membership Recruitment and Retention Coordinator who will execute the current member recruitment and retention plan and collaborate with the Executive Director on overall member recruitment strategies. Check out the full job description and professional requirements at www.FIADA.com or email a resume to Lisette Mariner at [email protected].


Contact your nearest ADESA location:

ADESA’s National Sales Calendar provides sale dates and auction locations for scheduled OEM, factory and captive-finance sales. Find the vehicles you need at ADESA.com/nationalsalescalendar.

NEW! National Sales Calendar on ADESA.com

Looking for inventory?

ADESA Jacksonville 904-764-1004Sale day: Thursday

ADESA Ocala352-351-5100Sale day: Friday

ADESA Sarasota941-756-8478 Sale day: Friday

ADESA Tampa813-620-3600Sale day: Monday

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The FIADA Quality Dealer award is reserved for an elite group of dealers who have

proven themselves through the years in a number of areas. First, they have to have a reputation amongst their customers that is beyond reproach. Second, they need to demonstrate a professionalism and business technique beyond compare. Last, they need to have a sense of community and service that stretches beyond themselves and into their industry and community.

Michelle Graudins is a used car dealer from Live Oak, Florida who has met those goals. She runs a thriving dealership, Economy Motors, which has a robust buy-here, pay-here base as well as alliances with franchise-level banks and lenders. She works out of a state-of-the-art facility complete with a two-story showroom, six service bays and nine full-time employees. She has also been an active member of the FIADA for over 18 years and has served on the Executive Committee as Regional Vice President and Secretary. Recognizing these accomplishments and others over her professional career, FIADA named her the Quality Dealer of the Year and presented her with the

www.fiada.com10 — Independent Dealer — November 2011

A SHININGEXAMPLE OF QUALITY

BY CHRISTY TAYLOR

Michelle Graudins (L) receives the Quality Dealer award from President Brandi Noegel (R).2.


award at the Annual Convention. She also made history by receiving it as the first woman to ever hold the state title.

Michelle’s story begins at the Florida Auto Auction of Orlando. She was a recent UF business grad who had studied economics when she had joined some friends at the auction in search of a Firebird convertible. Loving the excitement and electricity in the lanes that day, she decided to hold off on her job search and take a chance on opening a used car dealership. Instead of spending the $10,000 her grandmother loaned her to buy the car, she used it along with some of her own money to start Economy Motors in 1992. Turns out that the first of many smart business decisions.

The mix of people that come through the doors at Economy Motors can range from an hourly worker at the local chicken processing plant to an older retiree. No matter their occupation or stage of life Economy Motors is able to match them up with the right vehicle and the best financing for their situation.

“A+ credit customers can get a 1.99 per cent rate from a credit union; a first time buyer can be approved. Individuals with no down payments also have options,” Michelle said. “My staff and I also make the buying process very simple. Most everyone is in and out in less than an hour.”

Jason Little is the general manager at Economy Motors and was the one who presented Michelle with the Quality Dealer award during the Annual Awards Banquet at the convention. In his presentation speech he outlined the characteristics of quality dealers. One of them was awareness of changes taking place in the industry in the conditions of business and the ability to act on them immediately. Michelle’s instincts as a businesswoman and used

car dealer are sharp and might be one of the key reasons to her success.

A prime example happened three years ago when the economy started going south and banks were dropping out of the auto lending business faster than a cement block thrown out a window. Michelle adapted by pulling money out of savings and borrowing additional capital to increase her in-house lending portfolio. The decision allowed her to keep sales up and keep moving forward in a time when most businesses were happy to just be surviving. Now, banks are getting back into the auto business and Economy Motors is stronger than ever.

Understanding that taking care of customers is a vital part of her business Michelle is committed to always doing the right thing and building relationships that stay strong even after the cars drive off the lot. That extra care when it comes to customer service is what Michelle says the Quality Dealer award is all about. She is honored that her friends and peers see her in that way.

“A quality dealer is someone who views each customer as a potential source of repeat business and treated fairly, sold a superior product and have a positive experience with service after the sale,” Michelle said.

As an FIADA member for nearly as long as she has been a dealer, Michelle believes the dealer’s association helped educate her on the ins and outs of the industry. When she started she had virtually no experience so she joined FIADA hoping for a crash course in how to run a used car dealership. What she found was not only the training she needed on regulatory and legal issues but also a network of seasoned veterans, knowledgeable vendors and state agency contacts that were happy to pass along their advice and guidance.

While gender should have no impact on the success of a used car dealer, Michelle says that there are ups and downs to being a female in a male-dominated industry. On the downside, she has to fight harder at the auction be taken seriously and still often gets mistaken for an auction employee. On the other hand, customers seem to be more trusting of a woman in a sales situation and it seems easier to build rapport. Michelle hopes that with her accomplishments, especially being the

BY CHRISTY TAYLOR

“A quality dealer is someone who views each customer as a potential source of repeat business and treated fairly, sold a superior product and have a positive experience with service after the sale,”

— Michelle Graudins, FIADA Quality Dealer

first female quality dealer, she can help mentor young women and encourage them to consider selling cars as a viable career option.

Continued on Page 12.


QUALITY DEALER continued from Page 11.

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“Since being in business nearly 20 years I have noticed that there are virtually no more female dealership owners now than back then. My goal is to reach out to young females and show them that the auto industry affords numerous opportunities,” Michelle said.

Running the dealership is Michelle’s main focus, but she does take time away to devote to some of her other interests and passions. She is an avid snow skier and consistently wins the title of fastest female in the slalom ski races of the Jacksonville Ski Club she belongs to. She is also a huge animal lover and is committed to saving stray dogs. She’s fostered a few abandoned puppies and helped find them a loving home and is a member of DARE (Dachshund Adoption Rescue & Education).

Michelle will represent Florida in the national Quality Dealer contest which will be held in June at the NIADA

Annual Convention. Until then, she hopes to encourage her fellow Florida dealers to get involved with FIADA.

“I wish more dealers would realize the value of strength in numbers. Our association has been successful in eliminating a state lemon law and the

ability to put a stop on a delinquent customer’s vehicle registration. All of that was made possible due to the lobbying efforts. With more members and money to work with we are capable of doing so much more,” Michelle said.

Economy Motors oper-ates out of a brand-new, state-of-the-art facility in Live Oak.


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When FIADA created the Auction Person of the Year Award in 1992 it was to find

a way to say thank you to the many auctions, general managers, owners and staff who support the Association and the interests of its members. Every year the Nominating Committee discusses a handful of names to consider for the honor and eventually decides on one that has stood out from the others. This year that name was Jay Cadigan, market vice president for Manheim.

Cadigan, who was sitting in the audience at the FIADA Annual Awards Banquet with his wife Pam Mabry Cadigan (the 1995 Auction Person of the Year), was honored to receive the award and told FIADA members that Manheim was behind them all the way. His personal view is that there could be no Manheim, or even an auction industry, without independent dealers.

“My livelihood, and the auctions, depends on dealers. It means a lot to me to be honored by the Association,” Cadigan said. “It is an honor to get up every day and take care of the needs of our independent dealers.”

From a corporate perspective, Cadigan says he has always urged the individual Manheim facilities and managers to support FIADA. Sponsoring events, providing free classroom space for trainings and offering FIADA a forum to address auction participants about upcoming issues are a just a few examples of the partnership.

Cadigan says Manheim will continue to support FIADA in the future, but hopes the Association will return the favor by increasing participation and membership.

“The Association will be even more successful if it enlists more members and has greater attendance at events. I challenge all members to make those things a priority,” Cadigan said.

As the Market Vice President for Manheim, Cadigan oversees the day-to-day activities of operating locations in Florida and Puerto Rico. His 35 years of experience has been gained by working in automotive sales and leasing but predominately in various management roles at thriving auctions around the country including Golden Gate Auto Auction and the Skyline Auto Exchange, now known as Manheim NY Metro Skyline. He is also a past president of the National Auto Auction Association (NAAA) and currently serves on the NAAA Executive Committee and Board of Directors. Every experience has taught him the crucial role independents play in the automotive industry.

“It is important for us to take care of the independent dealers. It is more than an obligation to take care of them, it is something that we are compelled to do,” Cadigan said.

AUCTION PERSON

Jay Cadigan accepting the Auction Person of the Year Award at the Annual Banquet.

Brandi Noegel (L), Pam Mabry Cadigan (Middle), Jay Cadigan (R)

OF THE YEAR: JAY CADIGAN


BHPHWORLD.COM

BUY HERE-PAY HEREWORLD CONVENTION 2012

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The FIADA 2011 Annual Convention & Expo was an educational, exciting and enter-taining time for the 400-plus attendees who traveled to the Gaylord Palms Resort in Orlando, October 13-15. From the golf tournament, to the continuing education programs to the Annual Awards Banquet to the High School Reunion Theme Party there was something for everyone to enjoy, as you’ll see in these pictures!


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AutoTrader.comAuto UseCAR Financial ServicesCallSourceDealerTrackDennis LeVine & Associates, PAeBay MotorsEliteTrak GPSElite Underwriters IncGWC Warranty

A Dealer’s JournalACR of South FloridaAction AssetsAFS Acceptance LLCAmeriTagAssured Vehicle ProtectionAuction123.comAuto Data Direct, Inc.AutodocAuto Search Technologies

GoldStar GPS | EnfoTrace GPSICSFInsurance Auto AuctionsJ.P. Morgan ChaseLauderdale Paper & Balloon Co.Leedom GroupManheimMarkOne FinancialMechanical Breakdown Protection, Inc.National Auto Lenders


NIADA CertifiedNorthwood UniversityOPENLANERepoCityRouteOne LLCSanford/Cocoa Auto Dealers ExchangeSensible Auto LendingSmartAuctionStars GPSSterling Credit Corporation

Tax Refund Services Tax MaxTriumph Consulting Services, LLCUCMLINK.comUnited Acceptance Inc.Vehicle Dealer Insurance a Division of

Wayne Reaves Software & WebsitesWestlake Financial ServicesWestlake Financial Services ALPSWilliams & Stazzone Insurance Agency, Inc.Your Auction, Inc.


Download Convention Photos from our online photo gallery. Go to www.FIADA.com and click on “Convention.”


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FIADA is your number one source for advice and information. Technical questions, legal questions, regulatory questions...bring them on!

Our network of industry veterans, professionals and consultants can help you find the answers you are looking for. The best part is, it’s free to FIADA members. Call us anytime!


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BRANDI NOEGELPresident

Noegel’s Auto SalesStarke, FL

(904) 964-6461

ChRISTOPhER LEEDOMSenior Vice President

AutoMaxxSarasota, FL

(941) 309-1111

JIM KAGILIERYChairman of the Board

J.D. ByriderJacksonville, FL(904) 400-6190

DINO MERCURIOSecretary

Independent Credit, Inc.West Palm Beach, FL

(561) 686-8673

JOhN COUSINSTreasurer

Southeast Car AgencyGainesville, FL(352) 377-7787

DAVID COX, CMDRegional Vice President

Cox Motors, L.L.C.Lakeland, FL

(863) 686-9300

FRANK FUZYRegional Vice PresidentCentury Motors of S. FL

Pompano Beach, FL(954) 785-0369

GEORGE hICKEYRegional Vice President

Bond Auto SalesTampa, FL

(813) 238-7478

STEVE MARBAISRegional Vice PresidentMarbais Enterprises, Inc.

Ocoee, FL(407) 877-7422

PAUL MATTONRegional Vice President

Park Auto MallPinellas Park, FL(727) 639-1112

2011-2012 FIADA EXECUTIVE COMMITTEE:


INDUSTRY NEWS

The Bureau of Motor Vehicle Field Operations is simplifying the current requirements for licensed recreational vehicle dealer license at an established location. Subsequent to an approval letter from the manufacturer, importer or distributor, the line-make will be added to the dealer’s license immediately. The Department will advice the recreational vehicle dealer, manufacturer, importer or distributor and the responsible Regional Office via e-mail of the line-make addition to the existing license. The change will eliminate the need for a dealer to complete an application. Once the dealer receives the e-mail advising that the additional line-make has been added, they can begin accepting shipments and selling the new line-make. For more information, go to www.flshmv.gov/html/titlinf.html and select “Dealer, Manufacturer, Distributor and Importer Information.”

Dealer Advisory Issued for RV Dealers

NIADA’s new Visa Platinum Credit Card Program, which replaces the former Bank of America card program, is now available to members. Here are the key details of this new member financial services program: • Noannualfee• 0%introductoryinterestrateforfirstsixmonths• Nobalancetransferfees• Rewardpointsformerchandise,cashback,airlineflights,and

special merchant promotions• UnderwrittenbyUMBBank,$13Binassets,ratedA+by

S&P, manages over 6,000 credit card programs in the U.S., 2nd largest bank holding company in the U.S., named by Forbes as the second most financially stable private banking firm in U.S. in 2010.

NIADA Provides New Visa Platinum Credit Card for Members

There is a new wave of investors lining up to cash-in on buy-here, pay-here dealer portfolios. According to a recent article in the Los Angeles Times, private equity firms, payday lending chains and stock investors are very interested in capitalizing on what the National Alliance of Buy Here Pay Here Dealers estimates to be an average 38%profitmarginoneachsale.That is more than double the profit margins of convention retail car chains. Any dealer will tell you that buy-here, pay-here can be risky, but what makes the idea appealing to investors is the idea of “securitzation,” where loans are being bundled into securities in much the same way subprime mortgages were a few years ago; a practice which some think was the jump-start to the country’s economic meltdown. Never-the-less, in the last two years, investors have bought

Investors Willing to Back Buy Here Pay Here’smore than $15 billion in subprime auto securities. As risky as they are, backed mainly by installment contracts signed by people with a history of bad credit, most of these bonds have been rated investment grade and some have been given the coveted AAA rating. Investors are sold on the idea that with tens of thousands of loans lumped together, the securities are safe even if some of the loans prove worthless. Critics warn that the rush to securitization might encourage careless lending by dealers eager to sell more loans. However, that thought is balanced by the belief that investor scrutiny will require businesses to tow the line.

Choose your official NIADA Visa Card at http://www.cardpartner.com/pro/app/niada

November 2011 — Independent Dealer — 31 www.fiada.com PAID ADVERTISING


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