Ford Takes Step Toward Online Car Shopping With Fintech Investment
January 23 2017 - 1:30PM
Dow Jones News
By Peter Rudegeair
The lending arm of Ford Motor Co. has tapped a San Francisco
startup to make it easier for its customers to buy and finance a
car without going into a showroom.
Ford Motor Credit Co. said Monday that it would use software
developed by AutoFi Inc. to let car buyers shop for a Ford or
Lincoln car and secure a loan online through its dealers' websites.
As part of the new deal, Ford Motor Credit also announced an equity
investment in AutoFi, though it didn't disclose the amount.
AutoFi doesn't make any credit decisions or loans itself. The
company operates a marketplace where dealers can select which
banks, credit unions or other lenders can pitch loans to car
buyers. Customers can choose among competing offers and, after they
purchase a vehicle using AutoFi's service, the company gets paid a
fee by both the dealer and the lender.
"Our approach from the beginning was not to be, 'We're a Silicon
Valley disrupter that's come to take out the manufacturers and the
dealers,'" said AutoFi Chief Executive Kevin Singerman in an
interview.
While this new service promises to help streamline the buying
process, laws in many states require customers to visit a showroom
to complete the paperwork on a new-car purchase, which often must
be signed in person.
The auto-loan market expanded rapidly since the financial
crisis, surpassing $1 trillion in outstanding balances for the
first time in 2015, according to the Federal Reserve Bank of New
York. During the third quarter, lenders extended $150 billion in
auto loans, tying a record, according to the Federal Reserve Bank
of New York.
Other fintech companies are also eyeing the auto-finance market.
In August, car-buying firm TrueCar Inc. announced a deal with J.P.
Morgan Chase & Co. to simplify the process of finding a vehicle
and getting an auto loan online. In October, online lender
LendingClub Corp. announced it would start refinancing outstanding
auto loans for borrowers.
Mr. Singerman co-founded AutoFi in 2015 after a stint as a
corporate-development executive at LendingClub. "There was a lot of
innovation that was being brought for most other consumer finance
products, but auto was really lacking," he said.
The deal with AutoFi comes a few months after Ford Motor Credit
warned analysts that 2017 profit before taxes would be $300 million
lower than previously forecast due in part to falling values on
used cars. The Dearborn, Mich., auto maker has also been
maneuvering to position itself more like a tech company, committing
to big investments in projects like fully autonomous vehicles.
Christina Rogers contributed to this article.
(END) Dow Jones Newswires
January 23, 2017 13:15 ET (18:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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