HSBC Finance Sells Its Auto Loan Business

HSBC Finance Corp. has reached a deal to sell its auto loan servicing business, the company announced on Tuesday, Nov. 10, 2009. It plans to sell the auto loan business, as well as $1 billion in car loan receivables for $904 million to Santander Consumer USA, Inc.

The Details of the Agreement

According the HSBC, the auto loan servicing facilities in San Diego and Lewisville, Tx. will be assigned to Santander. The majority of the 700 employees from those locations are to be offered positions at the new company at the beginning of 2010. The company also plans to enter a loan servicing agreement for the remainder of its U.S. auto loan portfolio, which is in liquidation. The cash deal with Santander is expected to close in the first quarter of 2010.

Why is HSBC Selling?

Currently, HSBC is looking for ways to reduce its finance portfolio. Also, the company hopes to offer its employees opportunities to work for a company that demonstrates a longer-term commitment to the auto finance business, said, Niall Booker, the CEO of HSBC Finance.

What about the Customers?

According to both companies, Santander will offer servicing for the auto loans it purchases from HSBC. It will also service the remaining HSBC auto loan portfolio. In other words, if you currently have an HSBC auto loan, you should be in good hands with Santander – however, it’s a good idea to keep up with the transitions the two companies are making for your own best interest.

If the transfer of auto loan portfolios troubles you, keep in mind that refinancing with a new company is always an option. To learn more auto loan refinancing options, browse through Go Banking Rates for more information.