Blanket VSI and Lender Single Interest Options
B lanket Vendor Single Interest, also called Blanket VSI or Lender Single Interest, is a proven collateral risk transfer technique used by vehicle lenders to reduce net charge-off up to 18%. Blanket VSI involves charging a small premium to the borrower at loan origination, which can be excluded from the APR in most states. The premium is then used to pay for collateral and skip losses which occur after repossession.
Over the last 15 years, the loss profile of consumer vehicle portfolios has changed. Prior to 2005, Vendor Single Interest (Lender Single Interest) damage losses accounted for 95% of all portfolio losses with skip losses representing the remaining 5%. Since 2005, we have seen both the frequency and severity of VSI / LSI skip claims skyrocket where skip claim now result in more the 50% of a vehicle portfolio collateral losses. For more information on VSI / LSI statistics, download our white paper entitled “The Changing Landscape of Vehicle Portfolio Insurance.”
Miniter group delivers our blanket VSI programs with a unique approach that enables rate stability to the lender in both good and bad economic cycles. Using this technique, one of our lenders has maintained the same low VSI rate since 2003 and consistently achieves annual reductions in net charge-offs from 10% to 18%.
Blanket VSI Protection Services
There are two different ways in which we can work with you to protect your vehicle loan portfolio with blanket VSI: