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E-Loan secures $540 mln credit line for car loans

DUBLIN, Calif., June 24 (Reuters) - Online lender E-Loan Inc. said on Monday it secured a $540 million credit facility with Merrill Lynch to help finance car loans to borrowers with strong credit ratings.

The new credit structure gives it greater control over the pricing, underwriting and operational processes tied to its prime car loan business, while providing a better return for the company and cheaper car loan rates for customers, E-LOAN said.

"We benefit from greater revenue per auto loan and a marked increase in our return on capital," Joe Kennedy, E-Loan's president and chief operating officer said in a statement.

Meanwhile, E-Loan said it will continue to sell all its subprime car loans to various buyers in the secondary market. These loans, made to borrowers with poor or patchy credit histories, are underwritten based on guidelines established by the ultimate loan purchaser.

E-Loan has a $10 million line of credit facility with Merrill Lynch to support the interim funding of subprime car loans prior to their sale to the ultimate loan purchaser, typically within 10 business days.

On Nasdaq, E-Loan shares were up 4 cents at $1.09, toward the lower-end of its 52-week range of 66 cents and $2.25.

( U.S. Financial Markets Desk, +1 646 223-6313 fax +646-223-6329, [email protected]))