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Dave soby can walk the used-car lot at Carlisle Motors in Clearwater, Fla., with a little more confidence these days.

After all the shopping and persuasion and salesmanship and paperwork, Mr. Soby knows his customer probably won't be rejected for a loan.

Ford Motor Credit Co. "is taking a lot of our paper these days," says the Lincoln-Mercury outlet's used-car manager of loan approvals. "The used-car market is pretty good for us."


It seems to be good for many. So good, that the industry's major captive finance companies-such as Ford's credit operation-are digging deeper to finance older cars, attract lower-end customers and generally make financing a used vehicle as easy as bankrolling a brand new one.

"Almost all the automakers have a greater inclination to increase their lending to used cars," says Jordan Hymowitz, industry analyst with Montgomery Securities. "They want to increase their finance income to mitigate their reliance on new vehicle sales and profits. Here's an obvious way to do it."

It wasn't like this a few years ago. Many financial institutions exited the used-auto lending business after the banking industry shakeout of the 1980s. With the recession of the early 1990s, many other lenders tightened credit practices on the used market.

But the pendulum is clearly swinging back now.

Ford has rolled out its "Qualified Certified" program that, among other things, refinances leased vehicles that customers have returned to the factory.

Bill VanHorn, manager in national finance and insurance of Ford Motor Credit, says Ford's used-vehicle financing volume jumped 50% over the past five years and now equals Ford's new-vehicle finance activity.


Ford has extended its leasing deals to include leasing used vehicles. And it has also entered the "sub-prime" lending business last year, to finance customers with less than perfect credit histories. Those customers, notes Mr. VanHorn, are often used-vehicle buyers.

Toyota Motor Credit Corp. is also seeing more used-vehicle business lately. Last year, Toyota introduced a certification program to assure customers of the condition of its off-lease products. One part of Toyota's program provides factory financing.

But a more philosophical question looms for the captive finance companies: How far are they willing to go to finance aging cars and trucks that bear the company logos? In other words, how old is too old to finance?

It is more than a academic debate. On one front, large new distribution chains are being formed by Circuit City Stores and Republic Industries that will specialize in remarketing used vehicles.


The competition for the used-car market promises to become intense. In February, a report from auctioneer ADT Automotive estimated the largely disorganized used-vehicle market saw $365 billion in sales in 1996. ADT projects the emerging used-car superstore chains will siphon off 1 million used vehicles a year by the end of the decade.

At the same time, the auto industry is cultivating a new infatuation with the concept of "brand identity" these days. General Motors Corp. has created brand managers to oversee the images of GM vehicles. Recent ad campaigns around the industry-especially at Chrysler Corp.-have focused less on hawking hot models and more on raising brand image.

William Bivens, senior VP-finance at Nissan Motor Acceptance Corp., believes these trends will prompt finance companies to go after older vehicles with new zeal.

"We're seeing more and more product parity," reasons Mr. Bivens. "The Altima, the Taurus, the Camry and the Accord are all good cars. In the future, the thing that will distinguish them is their brand reputation, and an integral part of the brand will be their financing."

In Mr. Bivens' vision, even a used vehicle that is sold out of somebody's driveway will be entitled to factory financing.

"We should be as interested in the third Nissan owner as we are in the first," he says. "If we are serious about backing up the brand, we should follow that product through its life, no matter how or where it's sold."

Nissan is now looking for ways to put such thinking into practice, including making Nissan financing available outside of its dealerships. The company is exploring the idea of offering finance information over the Internet and possibly pairing its finance products with direct financial marketers, such as credit unions.


Whether such thinking will fly at the dealership remains to be seen.

Mr. VanHorn thinks there are limits to how far retailers want to be involved with used cars. Ford dealers, he contends, don't normally keep old products on the lot, and very old autos are often handled as cash transactions.

For now, captive finance companies are sticking to their traditional missions of serving the retailer. That means that Ford's credit arm would as likely finance a used Nissan sitting on a Ford dealer's lot as it would a used Ford sitting next to it.

But in the more brand-image-conscious future, that may change. According to Mr. Bivens' vision, someday consumers might expect Ford Credit to finance the used Ford-even when it's sitting on a Nissan dealer's lot.

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