U.S. patent application number 14/296541 was filed with the patent office on 2014-09-25 for method and system for providing financing.
The applicant listed for this patent is CCIP Corp.. Invention is credited to Mark K Lewis, Ricky Loftsgard, Kasra Naderi, Richard C. Potter.
Application Number | 20140289100 14/296541 |
Document ID | / |
Family ID | 39544280 |
Filed Date | 2014-09-25 |
United States Patent
Application |
20140289100 |
Kind Code |
A1 |
Lewis; Mark K ; et
al. |
September 25, 2014 |
Method and System for Providing Financing
Abstract
Methods for financing dealer debt instruments for customers of a
dealer are disclosed. One method, among others, an underwriter
system that finances a dealer debt instrument based upon at least
one of customer information, product information, and transaction
information for the dealer debt instrument. The underwriter system
may calculate an initial purchase offer, and then adjust the
initial purchase offer based at least upon at least one of product
information and transaction information. In some situations, the
underwriter system may provide a dealer with multiple purchase
offers for one debt instrument.
Inventors: |
Lewis; Mark K; (Atlanta,
GA) ; Loftsgard; Ricky; (Clive, IA) ; Naderi;
Kasra; (Atlanta, GA) ; Potter; Richard C.;
(Fayetteville, GA) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
CCIP Corp. |
Henderson |
NV |
US |
|
|
Family ID: |
39544280 |
Appl. No.: |
14/296541 |
Filed: |
June 5, 2014 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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11615549 |
Dec 22, 2006 |
8781951 |
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14296541 |
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Current U.S.
Class: |
705/38 |
Current CPC
Class: |
G06Q 40/025 20130101;
G06Q 40/02 20130101 |
Class at
Publication: |
705/38 |
International
Class: |
G06Q 40/02 20120101
G06Q040/02 |
Claims
1. A method for providing a financing service, the method
comprising the steps of: receiving information related to a
financing transaction, the information including information about
the customer's capacity to pay, the collateral and the credit
worthiness of the customer; simultaneously providing multiple
offers for financing the transaction with each offer including an
advancement amount and a sharing percentage of future payments and
each offer is based at least in part on at least a portion of the
information received; receiving an offer selection; and
incorporating the financed transaction into a portfolio of
transactions, the portfolio including a maximum value and tolling
that value by the value of the financed transaction.
2. The method of claim 1, wherein the step of receiving information
related to the financing transaction further comprises receiving
demographic information pertaining to the customer, and the step of
providing multiple offers for financing the transaction further
comprises determining if an initial offer is to be made based on
the demographic information.
3. The method of claim 2, wherein the demographic information
includes the state of the customer and the step of providing
multiple offers further comprises providing offers that have a
constant yield based on an interest rate identified for the
particular state.
4. The method of claim 2, wherein the step of receiving information
about the credit worthiness of the customer further comprises
receiving a credit score for the customer.
5. The method of claim 2, wherein the step of receiving information
about the credit worthiness of the customer further comprises
calculating a credit score for the customer using a proprietary
algorithm.
6. The method of claim 2, wherein the step of receiving information
about the credit worthiness of the customer further comprises
calculating a credit score for the customer using a proprietary
algorithm and information from a credit report generated by a
credit bureau.
7. The method of claim 6, wherein the portfolio is closed when a
plurality of financial transactions summing to a value within a
threshold of the portfolio value have been incorporated.
8. The method of claim 7, wherein as payments are collected on the
debt instruments in the portfolio, funds are accumulated to meet a
minimum reserve value.
9. The method of claim 7, wherein as payments are collected on the
debt instruments in the portfolio, funds are accumulated to meet a
reserve value calculated to be a percentage of the total amount of
advanced funds represented by the debt instruments in the
portfolio.
10. The method of claim 7, wherein as payments are collected on the
debt instruments in the portfolio, funds are accumulated to meet a
minimum reserve value calculated to be a percentage of the total
amount of advanced funds outstanding at the end of a payment cycle
and once the reserve is met, allocating funds from the reserve to
the dealer down to the minimum reserve value.
11. The method of claim 7, wherein as payments are collected on the
debt instruments in the portfolio, funds are accumulated to meet a
minimum reserve value calculated to be a percentage of the total
amount of advanced funds represented by the debt instruments in the
portfolio and further comprising the steps of: at the end of a
payment cycle, recalculating a new minimum reserve value based on
the present value of the outstanding balance of the advanced funds;
if the funds in the reserve exceed the new minimum reserve value,
distributing those funds that exceed the new minimum reserve value;
and if the funds in the reserve do not exceed the new reserve
value, continue collecting payments for the next payment cycle.
12. The method of claim 11, wherein the step of providing multiple
offers further comprises providing three offers with varying
sharing percentages.
13. The method of claim 11, wherein the step of providing multiple
offers further comprises providing three offers with varying
sharing percentages and advancement amounts.
14. The method of claim 11, wherein the step of providing multiple
offers further comprises providing three offers with varying
advance amounts and presenting the offers in a user interface that
includes a drop-down menu.
15. The method of claim 7, wherein as payments are collected on the
debt instruments in the portfolio, funds are accumulated to meet a
reserve value calculated to be a percentage of the total amount of
advanced funds represented by the debt instruments in the portfolio
and further comprising the steps of: at the end of a payment cycle,
recalculating the reserve value; if the funds in the reserve exceed
the new reserve value, distributing those funds in excess of the
new reserve value; and if the funds in the reserve do not exceed
the new reserve value, continue collecting payments for the next
payment cycle.
16. A method for providing a financing service, the method
comprising the steps of: receiving information related to a
financing transaction, the information including information about
the customer's capacity to pay, the collateral and the credit
worthiness of the customer; determining, based on the customer's
capacity to pay if an offer is to be made to the customer; if an
offer is to be made to the dealer, providing multiple offers for
financing the transaction with each offer including an advancement
amount and a sharing percentage of future payments and each offer
is based at least in part on at least a portion of the information
received; receiving an offer selection; incorporating the financed
transaction into a portfolio of transactions, the portfolio
including a maximum value and tolling that value by the value of
the financed transaction; and closing the portfolio when a
plurality of financial transactions meet the value of the
portfolio
17. The method of claim 16, wherein the step of receiving
information about the credit worthiness of the customer further
comprises calculating a credit score for the customer using a
proprietary algorithm and information from a credit report
generated by a credit bureau.
18. The method of claim 17, wherein the step of providing multiple
offers further comprises providing three offers with varying
sharing percentages and advancement amounts.
19. The method of claim 18, wherein as payments are collected on
the financial transactions in the portfolio, funds are accumulated
to meet a reserve value calculated to be a percentage of the total
amount of advanced funds represented by the financial transactions
in the portfolio and further comprising the steps of: at the end of
a payment cycle, recalculating the reserve value; if the funds in
the reserve exceed the new reserve value, distributing those funds
in excess of the new reserve value and accumulating future payments
received in; and if the funds in the reserve do not exceed the new
reserve value, continue collecting payments for the next payment
cycle.
Description
CROSS REFERENCE TO PRIOR APPLICATIONS
[0001] This application is a continuation of U.S. application Ser.
No. 11/615,549, filed Dec. 22, 2006, which is incorporated by
reference for all purposes.
BACKGROUND
[0002] Since 1985, the sub-prime automotive finance industry has
risen and fallen due to a lack of a disciplined credit policy among
publicly traded finance companies. The model that survived the
turbulent times of the mid to late 1990's was the basic buy
here/pay here self-financing model. The success of this model is
largely attributed to the dealer's concern in structuring the right
deal to mitigate risk and improve performance. Therefore, the
dealer became more focused on deal structure and customer
attributes in an effort to minimize risk and increase near term
cash flow. As finance companies began to fail in the late 90's,
those dealers who had largely abandoned this strategy and moved
upstream in credit quality and product, migrated back downstream
and regained the discipline that was lost in the overabundance of
lending, or simply did not survive.
[0003] The traditional concept of considering the "F & I"
department as a major profit center moved the emphasis towards
upfront funding and ancillary product sales for most franchise and
independent auto dealerships. This movement was detrimental to the
sub-prime industry, and can be cited as being a major contributing
factor to the downfall of the financial institutions that focused
on sub-prime during the mid 90's. With credit quality in the
country not improving, there still exists a very large (in fact
growing) industry for higher risk, sub-prime auto financing.
[0004] Today the majority of dealers have two key elements that can
allow them to capitalize on this opportunity: 1) access to a
growing number of consumers with questionable credit history, and
2) access to trade-in vehicles at a reasonable acquisition price.
However, most dealers are not capable of entering this market due
to the lack of certain resources vital to making this type of
program a success. Those resources include: the ability to raise
and maintain capital to run this product, access to a servicing
platform sufficient to provide customer service and collections for
this customer type, and a lack of historical data to support
underwriting and making credit worthiness decisions.
[0005] Thus, a heretofore unaddressed need exists in the industry
for, among other things, a financial product that allows dealers
who do not have the time or the resources necessary to start or
grow their own "self-financing" program to enter or expand their
penetration in the sub-prime financing industry.
SUMMARY OF THE INVENTION
[0006] Embodiments of the present invention can be viewed as
underwriting customer debt instruments. In this regard, one
embodiment of such a method, among others, can be broadly
summarized by the following steps: receiving from the dealer a
credit application for a customer to purchase a product sold by the
dealer, the credit application including customer information,
product information, and transaction information; obtaining a
credit report on the customer; determining whether to purchase at
least a portion of the debt instrument based upon the credit report
of the customer; and responsive to determining to purchase at least
a portion of the debt instrument, further including the steps of:
calculating an initial purchase offer based on the credit report of
the customer; adjusting the initial purchase offer using at least
one of the product information and the transaction information;
determining whether an index associated with the adjusted purchase
offer falls within a predefined range; and responsive to the index
falling within the predefined range, providing the dealer with the
adjusted purchase offer.
[0007] Another embodiment can be broadly summarized by the
following steps: receiving from a dealer an offer to sell a debt
instrument, wherein the debt instrument is the method used by a
customer to purchase a product sold by the dealer; determining
whether to purchase at least a portion of the debt instrument based
upon a credit report for the customer; determining an initial
purchase offer score based upon the credit report for the customer;
determining a second purchase offer score based upon at least one
of product information and transaction information; determining
whether the second purchase offer score is within an acceptable
range of scores; and providing the dealer with a purchase offer for
at least a portion of the debt instrument if, and only if, the
second purchase offer score is within the acceptable range of
scores.
[0008] Other methods, features, and advantages of the present
invention will be or become apparent to one with skill in the art
upon examination of the following drawings and detailed
description. It is intended that all such additional methods,
features, and advantages be included within this description, be
within the scope of the present invention, and be protected by the
accompanying claims.
BRIEF DESCRIPTION OF THE DRAWINGS
[0009] Many aspects of the invention can be better understood with
reference to the following drawings. The components in the drawings
are not necessarily to scale, emphasis instead being placed upon
clearly illustrating the principles of the present invention.
Moreover, in the drawings, like reference numerals designate
corresponding parts throughout the several views.
[0010] FIG. 1 block diagram illustrating one potential environment
for embodiments of the present invention.
[0011] FIG. 2. is a block diagram of an underwriter system.
[0012] FIG. 3 is one example of a record used by the underwriter
system.
[0013] FIG. 4 is one example of a record of an account
portfolio.
[0014] FIG. 5 is a flow chart illustrating one example of the steps
taken for purchasing a debt instrument.
[0015] FIG. 6 is a flow chart illustrating one example of the steps
taken for managing an account portfolio.
[0016] FIG. 7 is a graph showing an example of one embodiment of
the operation for allocation of funds collected.
DETAILED DESCRIPTION OF THE DRAWINGS
[0017] Embodiments of the present invention are directed towards
moving the buyout of a debt instrument by an underwriter right up
to the point-of-sale. In general, embodiments of the present
invention enable a level of involvement by a financing company
during the negotiation process between a potential purchaser and
the seller. More specifically, in one embodiment of the invention
directed towards the automotive industry, a customer and a dealer
enter into discussions for the purchase of a vehicle. As the dealer
and customer reach a point of agreement, the dealer logs onto a
system incorporating aspects of the present invention to obtain
financing options. Once logged into the system, the dealer enters
three types of information. The information entered describes
various aspects pertaining to the structure of the deal, including
the collateral the capacity or basic qualifications of the customer
(such as demographic information pertaining to the customer) and
the credit rating of the customer. The capacity or basic
qualifications of the customer includes a variety of information
including, but not limited to the living and work history of the
customer, length of time at current job and residence, financial
situation, gross income, current payments ratio to income,
location, frequency of payments, payment methods, use of starter
interrupt devices, whether the account is a joint or individual
account, whether ACH transfers are enabled or available, etc. All
of these elements, as well as other elements define the capacity of
the customer. This information is used to define a baseline offer
that is adjusted upwards or downwards based on the collateral and
the credit worthiness of the customer. Thus, if the customer
satisfactorily meets the minimum capacity requirements, they will
get an offer but, the offer will be further adjusted based on other
information.
[0018] The collateral focuses on the vehicle, including the make,
model, mileage, history, condition, etc. The credit worthiness of
the customer is determined using a proprietary scoring technique, a
commercially available technique, or a combination of both. Using
this information, the system then presents multiple offerings to
the dealer, three offers in one embodiment, that vary based on the
percentage of the loan that will be advanced to the dealer and the
share of the future payments that may be given to the dealers. The
dealer then has the opportunity to review these offers and select
the offer that is desired for the particular transaction.
[0019] Advantageously, embodiments of the present invention thus
provide multiple offers to a seller for the financing of a
transaction, implement a payment sharing program such that the
financer only buys a portion of the loan and, on top of this no
fees are accessed for the financial instrument.
[0020] FIG. 1 is a block diagram illustrating one potential
environment for embodiments of the present invention. The
illustrated environment includes a connected system for a dealer,
credit bureau, and an underwriter. The dealer system 102 is
connected to an underwriter system 106 via a network 104, and the
underwriter system 106 is in communication with a credit bureau
system 108 via the network 104. The network 104 may be the internet
or other network such as a telephone network. In some embodiments,
the dealer system 102 and underwriter system 106 may be in direct
communication. Similarly, the underwriter system 106 may be in
direct communication with the credit bureau system 108.
[0021] In some embodiments, the dealer system 102 may be a computer
system having the functionality for, among other things,
communicating over the network 104. In other embodiments, the
dealer system 102 may be comprised of network communication devices
such as terminals. In other embodiments, the dealer system may be
comprised of one or more computer servers with one or more
terminals or personal computers networked to the one or more
computer servers.
[0022] Among other things, the dealer system 102 may be configured
to communicate with the network 104, receive input from a dealer
110, and manage transactions and financial accounts, which may be
embodied in financial records 109. Among other things, the
financial records 109 may include unapproved credit applications
116, newly approved debt instruments 117, and aged debt instruments
118. For the purposes of this disclosure an aged debt instrument is
a debt instrument having a repayment history, i.e., the debt
instrument was approved some time in the past such that one or more
payment due dates have occurred some time in the past. For the
purposes of this disclosure, a newly approved debt instrument is a
debt instrument that has been approved but for which there is not
yet a repayment history, i.e., all of the payment due dates for the
debt instrument are still in the future. For the purposes of this
disclosure, an unapproved credit application is an application for
a credit application that has not yet been approved. Typically,
each one of the unapproved credit applications 116, newly approved
debt instruments 117, and the aged debt instruments 118, will
include information such as, but not limited to, customer
information, product information, and transaction information.
[0023] The dealer 110 has an inventory of products 112 that the
dealer sells to customers 114. For the sake of clarity, the dealer
110 will be described below as a car dealer, and the products 112
will be described below as cars. It should be appreciated that such
description is not intended as a limitation and is provided to
illustrate one embodiment.
[0024] As is well known, many customers 114 either cannot afford to
pay cash for a car 112 or may decide not to pay cash when
purchasing a car 112. Consequently, the dealer 110 may provide
prospective customers with financing to enable the prospective
customers to purchase one of the dealer's cars. When a customer 114
applies for financing, the dealer 110 uses the dealer system 102 to
gather and enter information for obtaining or qualifying for
financing. The credit application includes a variety of information
fields for providing customer information, product information,
credit information and transaction information. The credit
application is stored in the dealer system 102 as an unapproved
credit application 116. In some situations, the dealer 110 may
decide to approve an unapproved credit application 116 and decide
to underwrite the debt instrument created from the credit
application. In other situations, the dealer may decide to have the
underwriter system 106 decide whether to approve or disapprove the
as of now unapproved credit application, and if it is approved,
then the underwriter system 106 may underwrite the debt instrument
created from the newly approved credit application. After an
unapproved credit application has been approved by either the
dealer or the underwriter system, the unapproved credit application
becomes a newly approved debt instrument. The newly approved debt
instrument remains in that status until a payment history for the
debt instrument has been created. The payment history for the debt
instrument begins when the customer starts to make payments or on
the first payment date, which ever comes first. After a payment
history for the debt instrument has been generated, the status of
the debt instrument changes to an aged debt instrument. Typically,
aged debt instruments have payment histories of approximately 6 or
more months or 6 or more payment periods.
[0025] Frequently, the dealer 110 is not in the primary business of
underwriting debt instruments. Consequently, the dealer 110 may not
want to approve and underwrite debt instruments nor retain the debt
instrument on newly approved debt instruments and aged debt
instruments. Thus, the dealer 110 may decide to sell one or more of
the debt instruments, which includes newly approved debt
instruments and aged debt instruments, to the underwriter system
106. The dealer 110 may also decide to have the underwriter system
106 decide whether to approve an unapproved credit application, and
then if the underwriter system 106 approves the unapproved credit
application, the dealer may decide to sell the debt instrument
created from the credit application.
[0026] So as to sell a debt instrument--a newly approved debt
instrument, an aged debt instrument, or a debt instrument created
from an unapproved credit application--the dealer system 102
provides the underwriter system with an offer-to-sell 121. The
offer-to-sell 121 includes capacity or customer information,
collateral or product information, and credit information. In the
case of an aged debt instrument, the offer-to-sell may also include
payment history for the debt instrument.
[0027] Among other things, the underwriter system 106 receives the
offer-to-sell 121 from the dealer system 102. The underwriter
system is configured to process each received offer-to-sell and
provide the dealer system 102 with an offer-to-sell response 120.
The offer-to-sell response 120 may include notification that the
offer-to-sell was incomplete, e.g., if the offer-to-sell was for a
debt instrument created from an unapproved credit application 116,
the unapproved credit application might have been incomplete. The
offer-to-sell response might include a purchase offer from the
underwriter system 106. In the purchase offer, the underwriter
system 106 may offer to purchase some, or all, of the debt
instrument and may provide various terms for purchasing the debt
instrument. In some embodiments, the underwriter system 106 may
offer to purchase some or all of a debt instrument that is created
from an as of yet unapproved credit application, some or all of a
newly approved debt instrument, and/or some or all of an aged debt
instrument. Alternatively, the offer-to-sell response might include
notification that the underwriter system 106 declines to purchase
the debt instrument. For example, the offer-to-sell might have been
an offer to sell a debt instrument created from an as of yet
unapproved credit application, and the offer-to-sell response might
include notice that the underwriter system 102 refused to purchase
the debt instrument generated from the as of yet unapproved credit
application. Similarly, the offer-to-sell might have been an offer
to sell an aged debt instrument, and the offer-to-sell response
might have been a refusal to purchase the aged debt instrument. The
refusal may have been based upon one or more criteria including the
payment history of the aged debt instrument.
[0028] Among other things, the underwriter system 106 may parse
customer information from the offer-to-sell 121 and provide
portions of this customer information 122 to a credit bureau system
108.
[0029] In some embodiments, the credit bureau system 108 may be
comprised of a computer system having the functionality for, among
other things, communicating over the network 104, gathering
information related to a person's credit history, and analyzing the
gathered information to generate a credit score and/or credit
report. In other embodiments, the credit bureau system 108 may be
comprised of one or more computer servers and one or more databases
having credit related information stored therein.
[0030] The credit bureau system 108 receives the customer
information 122 and generates a credit report 124 pertaining to the
customer 114. Typically, the credit report 124 may include a
"credit score" such as a FICO score, created by Fair, Issacs and
Company and credit history. Typically, the underwriter system will
use the credit report 124 to process the offer-to-sell 121. In some
embodiments, the underwriter system may simply utilize information
received from the credit bureau system 108 to generate a credit
score using a proprietary technique. In other embodiments, the
utilization of a credit bureau system 108 may be omitted and the
underwriter system may generate a credit score directly from the
customer information 122 and/or other information accessible to the
underwriter system.
[0031] One aspect of the present invention is that the underwriter
system 106 may provide the dealer 110 with multiple purchase offers
for a given offer-to-sell 121. The multiple purchase options may
provide the dealer with varying degrees of risk and varying degrees
of remuneration for selling a debt instrument. Normally, the
greater the amount of risk that the dealer is willing to undergo,
the greater the potential remuneration for the dealer. If the
dealer is risk adverse, the dealer might select a purchase offer
that provides for more money upfront and less money in the future.
On the other hand, the dealer might select a purchase offer that
has less upfront money and greater potential future return. For
instance, in various embodiments of the present invention, the
offers may differ based on the amount of money the underwriter will
advance to the dealer and the share of the future payments that
will be paid to the dealer. In one particular embodiment, the
underwriter system provides three offers to the dealer with an
advance rate ranging from 41% to 75% of the amount of the debt
instrument with a percentage share of further payments decreasing
over that same range.
[0032] It should be noted that the underwriter system 106 and the
credit bureau system 108 are normally operated by independent
entities. However, in some embodiments, a single entity may provide
both underwriting functions and credit reporting functions.
[0033] FIG. 2 is a schematic diagram illustrating an embodiment of
the underwriter system 106 of FIG. 1. Generally, in terms of
hardware architecture, as shown in FIG. 2, underwriter system 106
includes processor 202, memory 204 and one or more user input
and/or output (I/O) devices 206 (or peripherals) that are
communicatively coupled via a local interface 208.
[0034] The local interface 208 can be, for example but is not
limited to, one or more buses or other wired or wireless
connections, as is known in the art. The local interface 208 may
have additional elements, which are omitted for simplicity, such as
controllers, buffers (caches), drivers, repeaters, and receivers,
to enable communications. Further, the local interface 208 may
include address, control, and/or data connections to enable
appropriate communications among the aforementioned components.
[0035] Processor 202 is a hardware device for executing software,
particularly that stored in memory 204. The processor 202 can be
any custom made or commercially available processor, a central
processing unit (CPU), an auxiliary processor among several
processors associated with the underwriter system, a semiconductor
based microprocessor (in the form of a microchip or chip set), or
generally any device for executing software instructions.
[0036] The memory 204 can include any one or combination of
volatile memory elements (e.g., RAM, such as DRAM, SRAM, SDRAM,
etc.) and nonvolatile memory elements (e.g., ROM, flash memory,
etc.). Moreover, the memory 204 may incorporate electronic,
magnetic, optical, and/or other types of storage media. Note that
the memory 204 can have a distributed architecture, where various
components are situated remote from one another, but can be
accessed by the processor 202.
[0037] The user I/O devices 206 may include input devices, for
example but not limited to, a keyboard, mouse, scanner, microphone,
a touch sensitive display etc. Furthermore, the user I/O devices
206 may also include output devices, for example but not limited
to, a printer, display, etc. I/O devices may further include
devices that communicate both inputs and outputs, for instance but
not limited to, a modulator/demodulator (modem; for accessing
another device, system, or network), a radio frequency (RF) or
other transceiver, a telephonic interface, a bridge, a router, etc.
One or more of these communication devices may be included in a
network interface device 210.
[0038] Software stored in memory 204 may include one or more
separate programs, each one of which comprises an ordered listing
of executable instructions for implementing logical functions. In
the example of FIG. 2, the software in the memory 204 includes
operating system 212 and account receivable manager (ARM) module
214. Among other things, operating system 212 essentially controls
the execution of ARM module 214 and provides scheduling,
input-output control, file and data management, memory management,
and communication control and related services.
[0039] ARM module 214 may be a source program, executable program
(object code), script, or any other entity comprising a set of
instructions to be performed. When implemented as a source program,
ARM module 214 is translated via a compiler, assembler,
interpreter, or the like, which may or may not be included within
the memory 204, so as to operate properly in connection with the
O/S 212. Furthermore, ARM module 214 can be written in one or more
object oriented programming languages, which have classes of data
and methods, or procedure programming languages, which have
routines, subroutines, and/or functions.
[0040] In some embodiments, the underwriter system 106 includes a
database 216. The database 216 can include any one or combination
of volatile memory elements (e.g., RAM, such as DRAM, SRAM, SDRAM,
etc.) and nonvolatile memory elements (e.g., ROM, flash memory,
etc.). Moreover, the database 216 may incorporate electronic,
magnetic, optical, and/or other types of storage media. Note that
the database 216 can have a distributed architecture, where various
components are situated remote from one another, but can be
accessed by the processor 202.
[0041] The ARM module 214 may include an account receivable
purchaser (ARP) module 218 and an account receivable portfolio
manager (ARPM) module 220. The ARP module 218 may be configured to
receive and process, among other things, the received offer-to-sell
121. To process a given offer-to-sell 121, the ARP module 218 may,
among other things, parse information such the customer information
from the offer-to-sell 121 and provide the customer information
122, among other information, to the credit bureau system 108. The
ARP module 218 may be configured to receive the credit report 124
from the credit bureau system 108 and further process the
offer-to-sell 121 using information contained in the credit report
124. When the offer-to-sell 121 was for a newly approved debt
instrument 117 or an aged debt instrument 118, further processing
of the offer-to-sell 121 by the ARP module 218 may be include
deciding whether or not to purchase the debt instrument based upon
the credit report 124. When the offer-to-sell 121 was for an
unapproved credit application 116, further processing of the
offer-to-sell 121 by the ARP module 218 may be include deciding
whether or not to approve the credit application and whether or not
to purchase the debt instrument created from the credit
application. For credit applications, the ARP module may decide
whether to approve the credit application and purchase the ensuing
debt instrument based upon the credit report 124.
[0042] Upon deciding to purchase a debt instrument, the ARP module
218 may generate an initial purchase offer. In one embodiment, the
initial purchase offer is primarily based on the capacity
information pertaining to the customer. This information is
reviewed and compared against desired values to generate the
initial offer. After generating an initial purchase offer, the ARP
module 218 may use information included in the offer-to-sell 121 to
adjust or refine the initial purchase offer and generate therefrom
one or more purchase offers. In some situations, in the process of
adjusting or refining the initial purchase offer, the ARP module
218 may decide not to purchase the debt instrument associated with
the offer-to-sell 121. Among other things, the ARP module 218 may
use product information and/or credit information to adjust the
initial purchase offers. As a non-limiting example, product
information may include make of car, model and trim of car, mileage
of car, appraised value of car, VIN of car, color, options, etc.,
and credit information may include report information received from
a credit bureau, a proprietarily generated credit score or a
combination of both. Other information may also come into play such
as the amount of down payment, number of payments and/or term of
debt instrument, interest rate of debt instrument, amount of debt
instrument, etc. After generating at least one purchase offer, or
after having decided not to generate a purchase offer--to have
decided to decline purchasing the debt instrument associated with
offer-to-sell 121--the ARP module 218 may generate the credit
application response 120 and provide the credit application
response 120 to the dealer system 102.
[0043] Assuming that the ARP module 218 generated multiple purchase
offers, the dealer 110 may use the dealer system 102 to select a
particular purchase offer from the multiple purchase offers.
Typically, each of the purchase offers includes purchase offer
parameters, which the ARP module 218 can set. Non-limiting examples
of purchase offer parameters include "advance payment" and "future
payment." For the purposes of this disclosure an advance payment
for a given purchase offer is defined as the amount of money that
the dealer receives when the dealer sells a debt instrument, and
for the purposes of this disclosure a future payment is defined as
the amount of money that the dealer is projected to receive in the
future. In some embodiments, the ARP module 218 may calculate offer
parameters such as the advance payment and future payment in
fractional terms, e.g., the fraction that the dealer receives (or
is projected to receive) over a given denominator. The given
denominator might be the total amount of the transaction, e.g.,
debt instrument amount plus down payment, or amount of the debt
instrument, or the projected repayment amount, e.g., principal plus
interest, or some other predefined amount. For the purposes of this
disclosure, dealer advance payment rate is defined as the fraction
of the advance payment offered to the dealer divided by a
predefined denominator, and dealer future payment rate is fraction
of the amount that the dealer is projected to receive in the future
divided by a predefined denominator.
[0044] The database 216 has multiple account portfolios 222 stored
therein. A single account portfolio 222 is comprised of multiple
debt instruments that have been purchased by the underwriter system
106. When the underwriter system 106 purchases a debt instrument,
the ARM module 218 either creates/opens an account portfolio 222 or
includes the purchased debt instrument in a previously
created/opened account portfolio 222.
[0045] Among other things, the ARPM module 220 is configured to
open and close account portfolios 222 and manage the account
portfolios 222. For a given account portfolio, managing the account
portfolio may include determining weighted averages for purchase
offer parameters of the debt instruments included in the given
account portfolio. As non-limiting examples, the ARPM 220 may
calculate a weighted advance payment rate or a weighted future
payment rate. Managing a given account portfolio may also include
crediting the given account portfolio with funds when a payment for
a debt instrument included in the account portfolio is received,
and maintaining a minimum reserve amount of cash in the given
account portfolio.
[0046] Among other things, the ARPM module 220 may be configured to
monitor the performance of the account portfolios 222 and to
distribute funds to the dealer 110 in accordance with predetermined
payout rules. Typically, the predetermined payout rules define
whether the dealer is due a payout, and if so, when the payout is
due and the amount of the payout. In some embodiments, the ARPM 220
may be configured to manage the account portfolios 222 such that
there is a reserve amount in the account. For a given account
portfolio, if the funds in the given account portfolio exceed a
predetermined reserve amount, then the ARPM 220 may distribute a
portion of the excess funds to the dealer. Typically, the
predefined payout rules define the percentage of the excess funds
that the dealer receives.
[0047] The ARPM module 220 may also be configured to monitor debt
instrument accounts. In some embodiments, the ARPM module 220 may
be configured to adjust a given portfolio account when a given debt
instrument included in the given portfolio account becomes
delinquent. The ARPM module 220 may implement predefined account
management rules when adjusting the given portfolio account. The
predefined account management rules may provide the dealer with the
first right of refusal to handle customer repossessions and asset
disposal (via auction or resell). In some embodiments, in the event
that a customer defaults on his or her debt instrument, the ARPM
module 220 may provide the dealer the following options: [0047] 1.
Waive interest accrued on payoff balance from date of last payment;
[0048] 2. Apply the reserve accumulated since the date of debt
instrument on the individual asset being repossessed; [0049] 3.
Allow the dealer to pay a predetermined amount to re-purchase the
debt instrument, and thereby gain the right to repossess the
product; and [0050] 4. Allow the dealer to re-purchase the debt
instrument by paying a percentage of the amount due on the debt
instrument, and thereby gaining the right to repossess the
product.
[0048] It should be noted that the ARPM module 220 may be
configured to close or lock an account portfolio 222 based on a
variety of factors. For example, the ARPM module 220 may be
configured to close or lock an account portfolio 222 based on
criteria such as, but not limited to, the time of month (e.g.,
close or lock an account portfolio at the beginning or ending of a
month) and/or capitalization (e.g., close or lock an account
portfolio when the value of the underwritten debt instruments reach
a predetermined value).
[0049] Once a portfolio is "closed," the ARPM module 220 may begin
to create a history file and a dealer report on the account
portfolio. The longer the account portfolio takes to close, the
shorter the average remaining maturity. The ARPM module 220 may
provide the dealer with an option to have a larger account
portfolio value in an effort to simplify reporting.
[0050] The ARPM module 220 may provide a one-page portfolio summary
in a "scorecard" format. This format will also provide the dealer
with a graphical performance indicator as to how account portfolio
is performing relative to expectation. In some embodiments, the
reports may be dynamically generated, and the reports may be made
available to the dealer at regular intervals via e-mail delivery or
a secure web site.
[0051] FIG. 3 illustrates an example of a record 300. The record
300 includes a customer information field 302, a product
information field 304, and a transaction information field 306.
Non-limiting examples of content that may be carried by the
customer information field 302 may include the customer's name, the
customer's address, the customer's date of birth, the customer's
social security number, and the customer's employment history,
which may include current employer, occupation and income and
previous employers, occupations, and incomes, and dates of
employment, addresses of employers, length of employment, etc.,
finance history and status including debt to earning ratios,
payment history and patterns, as well as other information. In some
embodiments, the customer information field 302 may include more
information or less information. For example, in one embodiment,
the customer information field 302 may include, but is not limited
to, other financial information such as the customer's bank account
(if any), the customer's credit accounts (if any), the customer's
debts (if any), the customer's obligations such as alimony/child
support (if any), etc.
[0052] The collateral or product information field 304 carries
information related to the product for which a customer takes out a
debt instrument to purchase the product. In the case of a car, the
product information field 304 may include information such as, but
not limited to, the manufacturer of the car, the model and trim of
the car, the year of the car, the Vehicle Identification Number of
the car, the mileage of the car, etc.
[0053] The transaction information field 306 carries information
related to the debt instrument used by the customer to purchase the
product. In the case of a car, the transaction information field
304 may include information such as, but not limited to, the sale
price of the car, the down payment by the customer, the dealer's
cost of the car, the debt instrument amount, the term of the debt
instrument, the outstanding balance of the debt instrument, the
interest rate of the debt instrument, the number of payments made,
the total number of payments over the term of the debt instrument,
the number of payments still due, the status of the debt
instrument--current, overdue, delinquent, paid in full, etc.--and
an identifier such as a debt instrument/account number.
[0054] The information carried in the record 300 can be provided to
the underwriter system 106 via the offer-to-sell 121. The ARP
module 218 may use the information in the record 300 to determine
whether or not to purchase a debt instrument associated with the
offer-to-sell 121. If the ARP module 218 decides to purchase the
debt instrument, the information in the record 300 may be used
determine the terms of an offer to purchase the debt instrument or
aged debt instrument.
[0055] FIG. 4 illustrates information that may be carried in an
account portfolio 222. The account portfolio 222 includes a
portfolio identifier field 402, dealer identifier field 404,
portfolio status field 406, receivables field 408, dealer
apportionment field 410, and portfolio performance field 412.
Typically, the ARPM module 220 manages multiple account portfolios
222, and each one of the multiple account portfolios 222 has a
unique identifier, which is carried in the portfolio identifier
field 402.
[0056] In some embodiments, the underwriter system 106 may purchase
debt instruments from multiple dealers. In that case, each of the
dealers is assigned an identifier. The dealer identifier field 404
carries the identifier of the dealer that is associated with the
account portfolio.
[0057] The portfolio status field 406 carries the current status of
the account portfolio. Among others, the current status of the
account portfolio may be "open," in which case more debt instrument
may be added to the account portfolio, or "closed," in which case
no new debt instruments may be added to the account portfolio.
[0058] The receivables field 408 may carry information identifying
each of the debt instruments that comprise the account portfolio.
The dealer apportionment field 410 may carry information for
determining the amount of funds to be distributed to the dealer.
For example, the dealer apportionment field 410 may carry weighted
averages such as, but not limited to, weighted future payment rate.
The weighted future payment rate is based upon a weighted average
of the future payment rates for the debt instruments that comprise
the portfolio. In some embodiments, funds distributed to the dealer
may be related to the weighted future payment rate.
[0059] The portfolio performance field 412 may also include
information related to the performance of the portfolio.
Non-limiting examples of information that may be included in the
portfolio performance field 412 includes the total funds received,
total outstanding balance of the portfolio, the current value of
the portfolio, amount of funds remitted to the dealer, and the
minimum reserve for portfolio i.e., the amount of money held in
reserve by the underwriter system during the life of the portfolio
account. The portfolio performance field 412 may also include
information related to delinquent debt instruments.
[0060] FIG. 5 is an one example of a flow chart illustrating steps
that may be performed by the underwriter system. In step 502, the
underwriter system receives an offer to sell a debt instrument. The
debt instrument that is being offered for sale may be an aged debt
instrument, i.e., a debt instrument with a repayment history, or a
new debt instrument, which does not yet have a repayment history or
has a short repayment history, or a prospective debt instrument
that has not yet been approved. The offer to sell includes customer
information that is parsed from the offer to sell. The customer
information identifies a customer, and in step 504A, the
underwriter system examines the collateral score of the customer.
If the collateral score is rejected 506A, the processing ends at
step 520. Otherwise, processing continues to step 504B where the
credit rating for customer is examined. Typically, the underwriter
system finds the customer's credit rating by providing a credit
bureau with required customer information. However, in some
embodiments, the underwriter system may include the capability for
generating the customer's credit rating. If the credit rating is
rejected 506B, the processing ends at step 520. Otherwise,
processing continues at step 504C where the capacity of the
customer is examined. If the capacity of the customer is
insufficient to avoid rejection, processing ends at step 520.
Otherwise, processing continues at step 508 where the multiple
offers are calculated.
[0061] In step 510, the underwriter system adjusts the initial
purchase offer. Among other things, the adjustment to the initial
purchase offer may be based upon the collateral or product
information and the credit score of the customer. Alternatively or
in addition to, the adjustment to the initial purchase offer may be
based on transaction information. In some embodiments, the
adjustment to the initial purchase offer may be based on collateral
or product information, the credit score and transaction
information.
[0062] In step 512, the underwriter system 106 calculates multiple
purchase offers based upon the adjustments to the initial purchase
offer. Typically, the multiple purchase offers may have differing
amounts of advance payment and/or differing amounts of future
payment or future payment rates. Naturally, advance payment amounts
and future payment amounts may be expressed in fractional terms of
advance payment rates and future payment rates, and in that case,
the multiple purchase offers may have differing advance payment
rates and/or differing future payment rates. Typically, a given
purchase offer may include both a future payment amount/rate (or an
estimated future payment amount/rate) and an advance payment
amount/rate (or estimated advance payment amount/rate, and/or other
financial terms.
[0063] In step 514, the underwriter system 106 determines whether
one or more, or all, of the multiple purchase offers calculated in
step 512 should be approved. For example, a given purchase offer
might have a specific future payment rate. In determining whether
to approve the purchase offer, the underwriter system 106 may
determine whether the specific future payment rate is within a
predetermined range of allowable future payment rates. Generally,
each specific financial term included in a given purchase offer is
checked to determine whether the specific financial term falls
within a predetermined range, and if so, then the given purchase
offer is approved. If one or more of the specific financial terms
included in a given purchase offer do not fall within their
respective allowable ranges, then the given purchase offer is
rejected. In some embodiments, the specific financial terms in a
given purchase offer may be weighted such that the given purchase
offer may be approved even if one or more of the specific financial
terms included in the given purchase offer are not approvable,
i.e., the one or more specific financial terms are outside of their
respective allowable ranges. In generality, the specific financial
terms of a given purchase offer may be considered
"offer-parameters," or indices, and if the "offer
parameters"/indices are within predetermined "allowable ranges"
then the purchase offer may be approved.
[0064] If none of the purchase offers calculated in step 512 are
approved, the process ends at step 520. On the other hand, if one
or more of the calculated purchase offers are approved, then the
process continues at step 516. In step 516, the underwriter system
106 provides the dealer system 102 with approved purchase offers
all at the same time. The provided offers are received and able to
be reviewed and selected by the dealer. In step 518, the
underwriter system receives the dealer's selection. The dealer's
selection may include specifying which purchase offer the dealer
has selected or notification that the dealer has rejected all of
the purchase offers by either allowing all offers to expire or
affirmatively rejecting all offers.
[0065] In some embodiments, a purchase offer score is assigned to
the initial purchase offer that was calculated in step 508. The
purchase offer score may be initially based upon the credit rating
of the customer. The purchase offer score may be related to an
advance payment rate for the dealer. In step 510, the purchase
offer score may be readjusted based upon product information and/or
transaction information. For example, based upon the product
information, which may include vehicle type, mileage on vehicle,
year of vehicle, trim of vehicle, etc., the purchase offer score
may be readjusted up or down by a first predetermined maximum
amount. Similarly, in step 510, based upon the transaction
information, which may include sale price, down payment amount,
dealer cost, debt instrument amount, term of debt instrument,
outstanding balance, interest rate, etc., the purchase offer score
may be readjusted up or down by a second predetermined maximum
amount.
[0066] In some embodiments, in step 512, one or more purchase
offers are calculated based upon the readjusted purchase offer
score. For example, if the purchase offer score is related to an
advance payment rate for the dealer, and if the purchase offer
score is above a first given value such as X1, then the multiple
purchase offers are calculated with decreasing advance payment
rates, which may decrease by a first predetermined amount of Y1%.
However, assuming that the purchase offer score is related to the
advance payment rate for the dealer and the purchase offer score is
above second predetermined value such as X2, then the multiple
purchase offers are calculated with decreasing advance payment
rates, which may decrease by a second predetermined amount of Y2%.
And, in step 514, each one of purchase offers is approved or
disapproved, and for a given purchase offer the purchase offer may
be approved or disapproved based upon the advance payment rate
contained in the given purchase offer. If the advance payment rate
falls outside of a given range, the given purchase offer may be
disapproved. In some embodiments, the acceptable range of advance
payment rates extends between 41% and 75%, approximately.
[0067] Referring to FIG. 6, which illustrates one example of the
steps taken to manage an account portfolio, in step 602, after
purchasing a debt instrument from the dealer, the debt instrument
is added to an account portfolio. The ARPM module 220 may be
configured to add the debt instrument to a presently open account
portfolio 222 or open a new account portfolio.
[0068] In step 604, the ARPM module 220 calculates portfolio offer
parameters for the account portfolio. The portfolio offer
parameters may include weighted future payment rates and/or
weighted advance payment rates. The portfolio offer parameters may
be used in allocating funds to the dealer associated with the
account portfolio.
[0069] In step 606, repayment funds for one of the debt instruments
included in the account portfolio are received. In step 608, the
ARPM module 220 determines whether a reserve fund of the account
portfolio is greater than a predetermined reserve amount.
Typically, the predetermined reserve amount has been previously
negotiated by an underwriter and the dealer. If the reserve fund of
the account portfolio is less than the predetermined reserve
amount, then in step 610, the received funds are added to a reserve
fund of the account portfolio. On the other hand, if the reserve
funds of the account portfolio are greater than or equal to the
predetermined reserve minimum, then the funds received in step 606
are included in a portfolio of distributable funds 612.
[0070] In step 614, the ARPM module 220 determines whether any of
the debt instruments included in the portfolio account are
delinquent. If so, then in step 616, the ARPM module 220 adjusts
the portfolio. Among other things, the ARPM module 220 may provide
the dealer the following options: [0074] 1. Waive interest accrued
on payoff balance from date of last payment; [0075] 2. Apply the
reserve accumulated since the date of debt instrument on the
individual asset being repossessed; [0076] 3. Allow the dealer to
pay a predetermined amount to re-purchase the debt instrument, and
thereby gain the right to repossess the product; and [0077] 4.
Allow the dealer to re-purchase the debt instrument by paying a
percentage of the amount due on the debt instrument, and thereby
gaining the right to repossess the product.
[0071] In step 618, excess pooled funds, i.e., funds included in
the account portfolio beyond the minimum reserve, are split with
the dealer. In some embodiments, the excess funds are split
according to the weighted future payment rate of the account
portfolio.
[0072] To further illustrate various aspects of the present
invention, a particular non-limiting example is presented. In the
example, a portfolio is established with a fixed value--assumed to
be $150,000. As debt instruments are purchased by the underwriter,
the value of the $150,000 portfolio is decreased by the total value
of the debt instrument. For instance, if the dealer sells a car for
$25,000 and receives a down payment of $5000, then the debt
instrument associated with that purchase is $20,000 and if the debt
instrument is purchased, the portfolio would decrease to $130,000.
Thus, a single portfolio will support multiple debt instruments.
Generally, the portfolios are established to support a fixed
value.
[0073] For each debt instrument or financial transaction that is
included in the portfolio, the debt instrument will include an
amount that was advanced to the dealer and a percentage of the
future payments received that will potentially go to the dealer.
The actual value of these two parameters are selected by the
underwriter, which can be comprised of a person, a system, a model,
a group, etc., and presented to the dealer in multiple packages.
Thus, the dealer has the ability to choose the exact values from a
limited list of values. The packages may all be simultaneously
displayed or a subset may be displayed with the ability to scroll,
select, drop down menu, or otherwise access the remaining packages.
Each such package is an actual offer that can be accepted by the
dealer. As a specific example, the dealer may be presented with
three options to select from, with each option having a different
advance value and a different future payment percentage. Although
the debt instrument is shared between the dealer and the
underwriter, the underwriter actually owns the contract and
performs/processes the collections. In one embodiment, a portfolio
value can be selected and then debt instruments can be purchased up
to the portfolio size or within a threshold of the portfolio size.
In another embodiment, debt instruments can simply be purchased and
then cut off once the aggregate value of the debt instruments is
equal to a desired value. For instance, if the underwriter opens a
$200,000 portfolio, the underwriter can purchase debt instruments
that sum up to this value. Once the funds for the portfolio are
exhausted, the portfolio is closed and another portfolio can be
opened. However, it will also be appreciated that multiple
portfolios may be opened at the same time and that additional
portfolios may be opened or initiated at anytime. Each portfolio is
independent--not cross-collateralized. Advantageously, this aspect
of the present invention helps to alleviate risk on the part of the
underwriter since each of the portfolios is separately managed for
profitability.
[0074] The value of the portfolio is based on the entire amount
that is financed--including the amounts that are advanced to the
dealer. FIG. 7 is a graph illustrating the manner in which the
portfolio is paid down and the collections are allocated in a
specific example of the operation of one embodiment of the present
invention. In the illustrated example, the portfolio is initially
set at $200,000 and the total amount of funds advanced to the
dealer is $100,000, or 50% of the portfolio. As payments are
received for the various debt instruments in the portfolio, the
dollars are apportioned based on the percentage allocation of the
future payments subjected to the maintenance of a reserve. In the
various embodiments, a reserve that is a percentage of the advanced
dollars is collected prior to distributing further funds to the
dealer. For instance, in the illustrated embodiment, a reserve of
25% of the funds advanced to the dealer is shown at the value of
$25,000. For each payment that is received during a particular
period of time, the funds are allocated to the reserve based on the
future payment percentage that is due the dealer. Assuming for a
first debt instrument that the dealer receives 45% of the future
payments, then a $400 payment would result in decreasing the
outstanding balance of the dealer advanced amount by $220 (55% of
$400) and would increase the reserve by $180 (45% of $400). This is
similarly allocated for each of the debt instruments at the
associated future percentage value for period of time--typically a
payment cycle such as a month.
[0075] At the end of a payment cycle, the reserve value is
recalculated in view of the collected funds and the current balance
of the outstanding advances. If there are excess funds in the
reserve after recalculation, these funds are distributed to the
dealer and payments received during the next payment cycle will be
placed into the reserve. However, if the reserve has not been met,
then no payment will be made and the funds will continue to
accumulate over the next cycle into the reserve. For the example
illustrated in FIG. 7, after the conclusion of the first payment
cycle PC1, $30,000 has been collected in total. If we assume that
the average of the amount to go to the dealer comes out to 50%,
then $15,000 of the $30,000 is allocated to the reserve and the
other $15,000 is used to reduce the outstanding advance balance
down to $85,000. At the end of the first payment cycle PC1, the
reserve value is recalculated based on the reduction of the
outstanding advance balance. In the illustrated example, this
reduces the reserve value to $21,250 (25% of $85,000). Because the
total reserve collected thus far is only $15,000, the threshold has
not been reached and thus, there is no distribution made to the
dealer.
[0076] During the next payment cycle PC2, assume that the same
amount of payments are collected, namely $30,000. Again, the
average allocation for these funds is assumed to be 50% for the
dealer. Thus, during the second payment cycle PC2 the reserve
builds up to $30,000 and the outstanding advance balance is reduced
to $70,000. When the reserve is recalculated based on the
outstanding advance balance of $70,000 at the end of second payment
cycle, the reserve value is $17,5000. Because the current balance
in the reserve fund is $30,000, $12,500 ($30,000 minus $17,500) of
this is distributed to the dealer.
[0077] During the third payment cycle PC3, the payments are again
accumulated into the reserve. At the end of the third payment cycle
PC3, assuming again that $30,000 was collected during the payment
cycle, the funds paid out to the dealer at the end of the third
payment cycle PC3 is equal to $18,750 (the balance of $32,500 minus
the new minimum reserve of $13,750). This process continues until
the balance in the advancements, the total value of the portfolio
and the reserve limit all converge simultaneously at zero. The
example provided of course is simplistic and an actual
implementation must take other variables into account. For
instance, if some of the payments are not collected for a given
period of time, the payments may be written off as bad debt. In one
embodiment of the invention, at the end of the payment cycle the
reserve is adjusted to account for bad debt. For instance, at the
end of payment cycle three in FIG. 7, if $5000 is considered bad
debt, then the dealer, rather than receiving $18,750 would only
receive $13,750.
[0078] Another aspect of the present invention is that embodiments
operate to provide a constant yield to the underwriter. When the
underwriter prepares the one or more offers to be sent to the
dealer, the underwriter selects a desired yield or a percentage
rate that defines the underwriter's margin of return. However, the
dealer is provided with a level of flexibility in selecting the
annualized percentage rate (APR) that is going to be attached to
the debt instrument. For instance, the underwriter establishes a
range of interest rates from which the dealer can select. The
underwriter identifies a percentage rate floor that defines the
underwriter's yield. When the offers are presented to the dealer,
the dealer can augment the offer to the customer by increasing the
APR attached to the debt instrument. Such an action will result in
increasing the profitability for the dealer but will not have any
affect on the underwriter's profitability. Advantageously, this
aspect of the present invention allows a higher degree of
automation in the process. For instance, because the dealer had a
range of interest rates from which he can select (i.e., a typical
range may be 20 to 22 percent in one embodiment), the dealer does
not have to call the underwriter to tweak the offers based on a
higher or lower interest rate being applied. Because the
underwriter receives a constant yield, the dealer can increase or
decrease his profitability by changing the APR. In application, the
yield rate can be fixed on a state-wide basis or a regional basis
and among other things, may take into consideration legal interest
rates authorized by the governing authorities for the states or
regions.
[0079] It should be understood that any process descriptions or
blocks in flow charts should be understood as representing modules,
segments, or portions of code which include one or more executable
instructions for implementing specific logical functions or steps
in the process, and alternate implementations are included within
the scope of the preferred embodiment of the present invention in
which functions may be executed out of order from that shown or
discussed, including substantially concurrently or in reverse
order, depending on the functionality involved, as would be
understood by those reasonably skilled in the art of the present
invention.
[0080] It should be emphasized that the above-described embodiments
of the present invention, particularly, any "preferred"
embodiments, are merely possible examples of implementations,
merely set forth for a clear understanding of the principles of the
invention. Many variations and modifications may be made to the
above-described embodiment(s) of the invention without departing
substantially from the spirit and principles of the invention. All
such modifications and variations are intended to be included
herein within the scope of this disclosure and the present
invention and protected by the following claims.
* * * * *