Auto financing for all, backed by predictive analytics

Credit Acceptance relies on insights gleaned from SAS to confidently predict loan performance, optimize pricing and provide exceptional service to auto dealers and customers

Every day, thousands of Americans struggle to secure auto financing because of challenges in their credit histories. For more than 50 years, Credit Acceptance has successfully solved this problem for consumers who might not qualify for loans from conventional lenders. The company was built on the belief that everyone deserves the opportunity to finance a vehicle, regardless of their credit history. This conviction, backed by powerful data analysis and predictive modeling, has catapulted Credit Acceptance from a small startup with a unique business model to one of the largest players in the subprime auto finance industry, with annual revenue now exceeding $2 billion.

“We were always a data-driven company, and we had a data warehouse going back to the early ’90s,” says Bill Strachan, Director of Analytics Technology at Credit Acceptance. Initially, the company stored its data in Access databases and Excel spreadsheets. While data was accessible, it would take days – and lots of manual effort – to obtain insights. Credit Acceptance wanted a modern, end-to-end data and AI platform to better manage data, develop models and automate decision making across the loan life cycle. That’s why Credit Acceptance turned to SAS technology implemented by a SAS Partner, Pinnacle Solutions.

Becoming an analytics powerhouse

The company’s initial analytics footprint was modest. “We’ve been using SAS solutions for nearly 20 years, but when I first started, it was a very small installation,” Strachan recalls. “We had a limited number of users – about 10 to 15. We didn’t even have a full analytics department – just a couple of users in risk management, some strategists and data warehouse developers.”

Things have dramatically changed since then. Analytics is now a cornerstone of decision making at Credit Acceptance, and the democratization of analytics has expanded access to data-driven insights across the organization.

“With SAS, we can see a company-wide view of our data,” Strachan says. “We started to build customized data marts centered around some of the core areas of our business, like loans, customers and vehicles. Our analysts, predictive team and strategy team were able to mine that data and ask new questions to gain new insights.”

SAS’ key capabilities drove rapid adoption across Credit Acceptance. “We now have 200 users on our SAS platform and more than 500 SAS programs in our production environment that are automated,” Strachan says. “And over time, with the help of Pinnacle Solutions, we’ve built out an inventory of nearly 100 models and strategies.”

Making vehicle ownership possible for consumers and profitable for dealers

Credit Acceptance’s mission is to get more customers in the driver’s seat while helping dealers move inventory and grow their businesses. Empowered by operational improvements and enhanced forecasting, Credit Acceptance is better positioned to connect people who want to purchase vehicles with dealers who want to provide financing. In this arrangement, the dealer benefits when the customer’s loan is repaid, while the customer benefits from obtaining the vehicle they need while building – or rebuilding – their credit.

With SAS in place, Credit Acceptance focused on three use cases that were foundational to its business as a loan originator:

• Optimize pricing models to balance risk and profitability.
• Predict loan performance and forecast future collections.
• Enhance loan servicing through predictive customer behavior analysis.

“Once we originate the loan, we’re keeping it in-house, and we’re servicing the loan,” Strachan explains. “So what we’re trying to do is predict consumer behavior. And if we’re able to predict what our customers are doing, we’re able to optimize not only our collection strategies but our contact strategies for loan servicing.”

This means Credit Acceptance can determine the best time and communication channel to reach out to a customer.

Impressive results and unprecedented business growth

Credit Acceptance now has 15,000 dealers in its network who have financed more than 4 million customers.

“We can now confidently predict loan performance, optimize pricing and deliver superior service to our dealers and customers,” Strachan says. “We’ve raised our loan volume 8.2%, expanded our active dealer network 13.8% and increased profitability 13% annually. And our forecasting precision has been particularly crucial – we’ve maintained an impressive 0.6% average forecast variance over the last 20 years.”

Having seen that analytics evolution over time, he appreciates the big picture too. “I’m really excited about the way we’ve grown our analytics environment from a very small installation to an enterprise-level environment that spans across the entire life cycle of a loan,” Strachan says.

“It’s really been phenomenal growth,” adds DJ Penix, founder and President of Pinnacle Solutions. “Not only in the number of SAS users, but in the different roles and personas within the organization. Some may be power users. Some may have backgrounds with other technologies like open source. Some may be business experts in loan and risk. So, again, it’s not just an expansion of the number of people but in the people who touch the systems and are empowered to make decisions based on the results from SAS analytics.”

What’s next for Credit Acceptance? The company is exploring a SAS Viya modernization project to further enhance its data and AI investment.

“We’re always looking for ways to better meet the needs of our customers,” Strachan concludes. “Using SAS, we’re in a stronger position to help people obtain the financing they need to turn their dream of owning a vehicle into reality.”