Online Lenders

Top digital auto finance companies

  • The opportunity is huge for digital origination of auto loans.
  • But, in the U.S., only 5% of car buyers have ever tried it.
close

Email a Friend

Top digital auto finance companies
Technology players are attacking the automotive industry from all angles. From competing head-on with the decades-old dealership model to autonomous driving, investors are chasing automotive commerce startups. Deals and funding in auto commerce have grown steadily from 2012, surpassing $3 billion in 2017. Auto finance is also experiencing its own mini-renaissance. Research shows that incumbent financing options and experiences create "decision fatigue" in many car shoppers. Negotiations are frustratingly long. There are too many steps and too much paperwork involved in financing a car. At most dealerships, "the auto finance process of today looks much like it did several decades ago -- paper-based, manual, and completed behind the scenes," PwC wrote in a recent paper on the auto finance industry. Indeed, digital origination of auto loans is still in its relative infancy. Only 5 percent of consumers in the U.S. have ever applied for an online auto loan, according to a study conducted earlier this year by FICO. More than any other country surveyed, American car buyers still prefer to get financing through dealerships (73 percent). So, while ease of financing plays a crucial role in the car buying process, a very small minority actually choose digital channels to apply for auto loans. There have been two approaches to upstarts entering the digital auto financing market. First, we've seen just a few stand-alone online auto lenders that provide financing services to dealers and customers. The more common model pursued by fintech startups in auto commerce is developing end-to-end transaction capabilities to buy and sell cars. In this framework, financing is an ancillary service for auto buyers and sellers. Here are some of the players you should know in digital auto financing: Stand-alone financing platforms AutoFi: Founded in 2015, AutoFi connects dealers to lenders to help customers find financing when they shop for cars online. Dealers can integrate AutoFi into their websites and dealerships to provide auto financing on the fly. The company has raised almost $30 million to date, including investment from Santander USA and Ford Motor. Earlier in 2018, AutoFi partnered with Chase. Other competitors: Autopay End-to-end auto buying and selling AutoGravity: AutoGravity uses a slick financing platform to enhance the overall digital car buying experience. The idea is to flip the process and help a consumer secure funding before they begin shopping for a car, not after. The company recently inked a deal with Audi Financial Services, adding the German carmaker to its lending-and-leasing platform. Carvana:  After ordering a car and getting financing online from Phoenix-based Carvana, a customer picks up her car from one of the company's car vending machines around the U.S. Other competitors: Blinker, CarsDirectCarSoup  

0 comments on “Top digital auto finance companies”

Outlier OpinionsMakers

Keeping the bad guys out, Lending, Online Lenders

SMB lending fraud keeps growing – how can lenders protect themselves?

  • Lenders of all kinds, from large banks to small community banks, credit unions, and fintechs, are hemmed in by the pressing issue of SMB lending fraud -- with fintechs continuing to experience the highest hit.
  • Convenience is a staple of digital lending. And while this is valued by borrowers looking for a quick and easy application process, it also opens the door for fraud.
Sara Khairi | June 14, 2023
Online Lenders

How Black-owned SoLo scaled to 1 million registered users

  • SoLo Funds has become the first Black-owned financial services company to cross the 1 million customer account mark last month.
  • The fintech facilitates P2P loans for consumers living on the margins of financial services. Acquiring more than 1 million users hasn’t come easy for SoLo, though.
Sara Khairi | March 29, 2023
BNPL, Online Lenders

PayPal’s evolving strategy in a crowded BNPL market 

  • We take a look at how PayPal entered the BNPL sector by launching its first BNPL offering – ‘Pay in 4’, and expanded its suite of products by rolling out another BNPL product, ‘Pay Monthly’, in 2022.
  • Steve Mikulcik, VP of Global BNPL at PayPal, talks about the ramifications of such a rapidly-growing industry, and whether it is still serving the purpose of facilitating consumers.
Sara Khairi | January 17, 2023
Online Lenders

5 questions about managing everyday Americans’ finances with Achieve’s Andrew Housser

  • Achieve, formerly known as Freedom Financial Network, offers digital finance solutions like consolidation programs to underserved credit groups.
  • Tearsheet sat down with the co-founder and co-CEO of Achieve, Andrew Housser, to learn about his plans for the company and how it caters to the needs of everyday Americans.
Rabab Ahsan | December 28, 2022
Online Lenders

Does B2B BNPL have the potential to emerge as the next top fintech trend?

  • Is B2B BNPL keeping up to speed with the B2C model?
  • Contrary to B2C, B2B BNPL is viewed more as the automation of existing credit processes with slight innovation. However, the model brings its own set of challenges.
Sara Khairi | October 31, 2022
More Articles