Ottawa-based sub-prime auto lender OCM Auto Financing Group Ltd., is bolstering its lending power, eying expansion as used-vehicle prices remain high, and more buyers fail to qualify for prime loans amid higher interest rates.
“There’s more demand in sub-prime today than there was three years ago, pre-pandemic,” company CEO Andrew Abraham told Automotive News Canada. “More people are struggling to get approvals at the big banks, so there’s definitely more demand, more customers.”
As with other non-prime auto lenders, OCM provides car loans to newcomers to Canada, those with poor or no credit, and others unable to tap bank financing, Abraham said.
“Whenever the bank says no, we’re there to backstop them.”
OCM works with 800 auto dealerships across Ontario and Quebec, booking business with roughly 250 of those retailers in any given quarter, Abraham said.
And as the sub-prime auto lending market gains traction, the company is pursuing growth across both provinces.
OCM announced it had secured a new credit facility from CWB Maxium Financial Inc., an arm of Edmonton-based Canadian Western Bank, April 20. The new facility combines with funds from existing accredited investors, increasing the size of OCM’s total fund to $100 million.
The larger fund will allow the company to provide loans to more sub-prime car buyers, as demand for financing among those who do not qualify with the big banks grows, Abraham said.
Given lingering production constraints, leading to a limited inventory of new vehicles, Abraham expects used-vehicle demand to remain high.
“None of us have a crystal ball to know when and if the supply chain ever goes back to where it was when it comes to new cars. Until then, the used market is going to do well.”
Used-vehicle prices have softened in recent months, Abraham added, but vehicles are still holding their value well, and he does not anticipate a return to pre-pandemic used-vehicle prices.
OCM, which was founded in 2018 and employs about 30 staff today, plans to remain focused on the Ontario and Quebec markets, though it has considered moving into other provinces to add to its network of dealers.