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

Member Exclusive, Online Lenders

As Feds increase fintech scrutiny, experts outline a BNPL regulatory framework

  • After experiencing a meteoric rise in recent years, the BNPL industry is bracing itself for increased regulation in the US as government agencies are looking to widen their oversight into the fintech sector.
  • With concerning signs regarding credit quality, risk intake and its effects on consumers, industry experts are advocating for more regulations and offer recommendations of what these could look like.
Iulia Ciutina | May 04, 2022
Member Exclusive, Online Lenders

Lending Briefing: BNPL regulation and the growing digital lending market

  • The BNPL market needs more regulatory oversight in order for consumers to be protected, new research suggests.
  • The fast-growing BNPL industry exists in a legal gray space and mostly consists of subprime borrowing, and pure players are yet to demonstrate profitability.
Iulia Ciutina | April 27, 2022
Online Lenders

Deserve’s CEO on the fintech’s new corporate credit card as a service offering

  • White label commercial credit is blooming, aiming to help companies serve other businesses by giving them easy access to capital. In our latest briefing, we spoke with Deserve's CEO Kalpesh Kapadia on the fintech's new commercial platform.
  • In other developments, community banks are partnering with crypto lenders - selling loans to a crypto trust and converting the cryptocurrency in fiat dollars to continue writing more loans.
Iulia Ciutina | April 18, 2022
Online Lenders

This week in lending: 2021 BNPL results, credit markets poised for growth this year

  • US BNPL players are pursuing aggressive growth strategies, but underlying performances are beginning to surface some concerns in the market.
  • After the pandemic made lenders cautious, credit markets have opened again in 2021, thanks to positive economic signs from borrowers.
Iulia Ciutina | March 18, 2022
Member Exclusive, Online Lenders

Lending Briefing: 2021 BNPL results, C&I lending picking up again

  • US BNPL players are pursuing aggressive growth strategies, but doesn’t necessarily mean healthy growth - underlying performances are beginning to surface some concerns in the market.
  • In commercial and industrial lending, volumes are picking up for the third consecutive quarter since the onset of the pandemic.
Iulia Ciutina | March 16, 2022
More Articles