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Asbury Park, N.J., car dealer won't yield
(Asbury Park Press (NJ) Via Acquire Media NewsEdge) Jan. 6--After Capital One decided to cut off the wholesale financing he needs to stay in business, Asbury Park used-car dealer Adam Berlin said he's not giving up on finding a solution to his problem.
He has searched for other banks to lend him money after Capital One Financial Corp. informed him and about 20 other dealers in New Jersey and New York that it was ending credit lines the dealers use to buy cars for their lots. But there were no takers.
"Even in good times, it's a hard loan. Not a lot of banks do (it). But in these times, forget it," said Berlin, who started Sports & Imports, a used-car dealership, more than six years ago. "Right now, it's impossible."
Problems in the credit market stemming from troubles in the worldwide economy persist.
For auto dealers, credit and financing are crucial. Credit lines, called floorplan financing and which can run into the millions of dollars, are used by dealers to buy vehicles for their inventory.
Capital One's decision has threatened the fabric of Berlin's business. Berlin signed a credit line for $2.75 million with Capital One in July. A month later, the bank informed him it was exiting the floor-plan business in New Jersey and New York.
Berlin said the bank can't break the contract. "I'm a credit-worthy borrower and they need to honor their obligations and not be let go because they're a powerhouse," Berlin said.
Capital One also had told him to close another separate credit line with Manheim Financial Services. Now Manheim won't re-sign, he added.
Capital One spokesman Steven Thorpe said the bank does not comment on customer accounts.
Thorpe has said the bank made the decision to discontinue its financing of dealer inventories in New Jersey and New York as part of a regular review of the bank's strategic focus. The arrangements were part of North Fork Bank, which Capital One purchased in December 2006.
Now Berlin is looking for other sources of funding. "My inability to buy cars right now is killing us," Berlin said.
One option is to seek $3 million from private investors or team up with a new car dealer, an option that would likely mean he would have to give up his building on Asbury Avenue.
He has cut expenses, cutting his work force down from 32 people four months ago to 10.
"I have had people reach out that want to do something to help," Berlin said. "I don't want this to end. I have a good thing here. The community knows me and people know me. I really, really don't want to give it up."
His business is good for the economy, he said. In the past three years, the company has collected $1.5 million in sales taxes, selling more than 5,000 vehicles during that time.
The dealership is part of the local economy, with its own vendors and suppliers. "It is things like this that are compounding a bad situation, making it a hundred times worse," Berlin said.
He's also critical of Capital One's decision at a time when the bank received money from the federal government's $700 billion Troubled Asset Relief Program. The bank received $3.6 billion, the U.S. Treasury said in November.
"It's like all the government's efforts are just not doing a thing," Berlin said.
In an e-mail, Thorpe said the bank used TARP funds to originate consumer and business loans and to invest in "high-quality and highly liquid securities back by loans to consumers."
"In the face of a rapidly deteriorating economic environment, TARP funding enabled us to make more loans that would have been possible without it," Thorpe said.
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