Kenneth B. Shilson: Big Opportunity in the Auto Loan Bubble

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Kenneth ShilsonKenneth B. Shilson, CPA, is President of Subprime Analytics, a consulting company which provides subprime portfolio analysis services and custom credit scoring solutions (Profit Max). The firm also delivers due diligence services for banks and financial institutions that supply capital to the subprime auto industry.

Ken has helped pioneer an IRS approved tax strategy for “Buy Here Pay Here” (BHPH) dealers regarding the use of a related finance company. He has authored numerous articles on accounting, tax and other matters related to the used car industry. He has also been a speaker at several automotive national conferences and conventions.

In 1988 he founded NABD, a highly successful special interest and education group for the auto Industry. In 2015 Ken was admitted into the NIADA “Ring of Honor” (Hall of Fame), for his contributions to the BHPH industry. Ken is a graduate of Miami University, Oxford, Ohio.

Here is a glimpse of what Ken shared in the interview.

“When I started my CPA firm I wanted to find a niche market that had growth potential — the auto finance market was an industry that presented a large opportunity. Most CPA firms were only interested in servicing franchise new car dealers. No one wanted the used car market. Being contrarians, we became the experts in subprime auto financing and ultimately became the largest CPA firm in that niche.”

“Our country is car dependent! Buy Here Pay Here auto financing is extremely important to the US economy; it provides auto transportation to millions of Americans that do not have the ability to acquire traditional financing.”

“There is a fundamental difference between obtaining credit from an Independent Auto Dealer and a finance company. Independent Dealers provide customers with more than financing; they provide a transportation solution. They want to keep the car running for the life of the contract by offering maintenance and repair solutions.”

“There is a bubble in the auto finance industry due to the securitization of auto loans — similar to the mortgage industry- where the defaults eventually affected the bond yields. This bubble of pending defaults will create an opportunity for the deep subprime independent auto financers.”

“Successful entrepreneurs do not follow others. They find a niche that is different and is underserved. To do this, it requires good financial management of your business. Financially, you have to know what you are getting into, you have to understand your capital needs and know where the cash is coming from.”


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