HSBC Auto Finance: Gone but Hard to Forget

13 Jul

hsbc HSBC Auto Finance discontinued its operations (at least in terms of issuing new car loans) in August of 2008. Based on a review of several consumer complaints, I’m willing to bet that decision didn’t result in too many tears from anyone other than the employees who lost their jobs.

HSBC, who specialized in sub-prime auto loans, closed shop in 2008. SubPrime Auto Finance News reported the story like this:

“The company discontinued new auto loan originations from dealer and direct-to-consumer channels in July 2008 and is only originating branch loans until a third-party provider can be found. The portfolio amounted to $11.5 billion at the end of September, down nearly 12.5 percent year-over-year, and the portfolio will continue to amortize over time,” executives said.

HSBC broke the news like this:

HSBC has made the decision to exit the Auto Finance business in the U.S.. As a result, HSBC Auto Finance will discontinue offering auto loans to its customers effective August 6, 2008.

However, HSBC Auto Finance will continue to service and collect on its existing portfolio of customers as their loans mature.

It doesn’t appear as if HSBC closed its lending operation directly because of customer complaints. The auto finance element of the Household Bank empire was just flat-out losing money, apparently. They decided to cut and run to focus their attention elsewhere. Now, one could argue that all of the consumer noise made things so tough that it led to things gettin’ ugly, but I’m guessing the decision had more to do with the overall economic picture. Household HSBC Watch was on top of the story a year ago and provided some information from an unnamed source that summed up the HSBC plan with respect to that little chunk of the massive Household Bank empire:

This is nothing new for HSBC, closing units that continue to lose money. We will see, as HSBC continues to focus on the mortgage business. The same day the NY Times said that the subprime mortgage crisis has finally hit bottom. Hope this works out for them.

Okay, let’s get the laughing out of the way right away. They moved away from car loans to focus on the ultra-lucrative subprime mortgage industry, huh? I think we can all probably guess how that worked out for them! Talk about going from the frying pan right into the fires of economic hell, huh?

As it turns out, HSBC Auto Finance may have deserved to die. Every big finance company gets its share of complaints, but those who have a problem with HSBC offer some compelling arguments.

The guy who was getting eight phone calls a day after answering HSBC’s question on the first call paints an ugly picture of the outfit’s customer service (and listening comprehension skills). Though his complaint eventually sort of dissolves into the histrionics that so often accompany consumer grips, this criticism of HSBC isn’t/wasn’t rare. I found several people saying the same thing about the way HSBC’s fingers did the walking a little too often.

RipOffReport features no less than 45 complaints for HSBC Auto Finance. I bet you could find others there by using “Household Bank Auto Finance” or other variations of the company name. While many of the complaints are the usual whining by people who failed to make their payments on time and just don’t like experiencing consequences for their actions, others are pretty persuasive. By all accounts, it looks like this operation wasn’t ran spectacularly well.

I’m sure that the loss of a subprime auto lender wasn’t too exciting for all of those “we’ll approve everyone and/or his pet cat” auto lots out there, but I’m pretty sure that more than a handful of people were happy to see them leave the sector. And it still cracks me up that their master plan was to double down on the subprime mortage industry in 2008. Ouch.

HSBC Auto Finance: Gone… but hard to forget!