![]() ![]() I did all the calculations on the average. A welcoming, dynamic workplace, the CAF environment blends professionalism and fun while providing associates with development opportunities. To choose your options for email notification, please enter your email address below and click Submit. Auto Finance Headquarters Located in suburban Atlanta, CarMax Auto Finance, also known as CAF, is one of the top 5 in used vehicle financing. Average loan defaulter makes three months of payments before defaulting.Īlthough this case looks like a typical “starting a new business/service” case, I did not really use any framework because this case is more of a question of establishing where the break-even marks would lie. You may automatically receive CarMax, Inc.Minimum down payment for all customers: $1,000.Average price of car sold to customer: $7,000.However, most lenders also require a steady source of income, proof of residence. If you’re looking to buy or lease a new or used car, the most important factor is usually your credit score. There are several factors you need to consider before applying for a loan with Carmax Auto Finance. Average cost of a used car to CarMax: $6,000. Carmax Auto Finance is an auto lender based in the US.The Question: What should be the cutoff level where CarMax decides to give potential buyers the loan? What issues might cause you to alter this cutoff-level?Īdditional Information: (to be given to you when asked) ![]() Buyers ultimately fall into two categories, those that pay off the loan entirely, and those that default. Each loan only lasts 1 year in which payments are made monthly and the entire loan will be paid off in 1 year’s time. The credit check rates potential car buyers on a scale of 0 to 100, where 0 corresponds to a 0% chance of paying off the loan and 100 corresponds to a 100% chance of paying the loan in full. To be eligible for a loan, customers must undergo a complete credit check (which we assume to be accurate). In order to boost sales, CarMax is considering offering car loans to customers that the dealership itself will finance. They are located in a low to middle-income area and in the past have only sold cars to customers who are willing to pay 100% of the cost up-front or can obtain bank financing. Their business has been stagnating in recent years. Industry Coverage: automotive, motor vehicles retail financial services.Ĭase Interview Question #00334: Our client CarMax (NYSE: KMX) is a used car retailer and dealership headquartered in Richmond, Virginia, USA. Case Type: math problem new business finance.Ĭonsulting Firm: Capital One 2nd round job interview. ![]()
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