It’s old hat now to say that auto finance is an industry ripe for disruption because, quite frankly, it’s already happening.
From keyless carsharing technology to bringing the entire car-buying process online — including discovery, financing, purchase, and trade-ins — the shakeup of finance is well underway. Each company has a different business model and offers consumers a new experience, which highlights the expansive opportunities, growth, and surprising malleability of auto finance as consumer preferences and mobility itself, change.
Here are 10 innovative startups that are disrupting the auto finance space, and how each plans to respond to mobility trends:
1. Divido: Buy Now, Pay Later
Divido is a platform for merchants, lenders, and intermediaries that want to offer instant new credit as a payment option. Its business model allows customers to spread the cost of any purchase over a certain period while the merchant gets paid in full right away.
Divido is integrated with multiple lenders and financial service companies in multiple countries across Europe — something no other finance provider offers with a single integration, David Backshall, commercial director for Divido, told Mobility Finance. This means that Divido can scale on a global level which other finance companies just cannot do, Backshall said.
The company doesn’t see changing mobility ownership as a threat, and in fact embraces the idea that consumers have more choice, Backshall said. Divido is prepared for how people initially purchase a vehicle, he said, because the company also provides financing for consumers who want to purchase a servicing plan, extended warranty, or repair their vehicle.
“The U.K. after-sales market was worth more than [$26.9 billion] in 2016, and this is set to continue to rise the more vehicles used on roads,” Backshall said. Whether consumers own their vehicles, lease, finance, or carshare, those consumers will still need servicing and repair. Divido’s service is, “well positioned to help consumers finance their motoring expenditure,” he said.
2. Drover: SaaS-Enabled Marketplace
Drover is a car rental marketplace platform for rideshare drivers. The startup offers consumers a new kind of car rental experience targeted at rideshare drivers who typically only need the vehicle for a year or less.
Drover’s marketplace is open to any rental company, leasing provider, car dealer, or OEM to list vehicles, Felix Leuschner, Drover’s chief executive, told Mobility Finance. “These have been fleet vehicles, and we are looking at off-lease vehicles as well,” he added. “In terms of services provided, we’re — in the end — monetizing assets [cars] effectively for their owners, whoever that may be. We do that by providing a liquid marketplace that generates utilization and earnings while providing an end-to-end software solution.”
In addition, the London-based company provides flexible access to cars including insurance, through a software-as-a-service (SaaS) marketplace. Drover’s SaaS-based fleet management and rental platform allows large fleets to monetize and manage vehicles effectively with little overhead required.
3. Honcker: Mobile Car Leasing
Honcker allows customers to lease a car directly from their phones rather than the traditional method of leasing a car online, in which your personal details are entered into lead generators that are then blasted out to hundreds of dealers. Honcker, instead, flips that process by asking to see lease specials offered by multiple local dealerships.
“Additionally, and most importantly, we are the only app or website where you can complete a lease transaction — not become a lead, but actually complete the lease online,” a Honcker spokesperson told Mobility Finance.
The company is already planning for the shifts in consumer mobility behavior, by discussing with necessary partners as the auto industry evolves, the spokesperson said. “We look at ourselves as even better positioned as this happens because — do you really think a customer for an electric vehicle or [who is involved in] shared ownership will buy this vehicle at a store? It’s simply counter-intuitive. As the industry evolves, more of the transaction will go online,” the spokesperson added.
4. AutoGravity: Indirect Car-Buying
AutoGravity is a multi-lender, indirect car-buying platform. The company is building a data science team that could one day provide car and auto loan suggestions — much like Amazon, Serge Vartanov, chief marketing officer for AutoGravity, said during a panel discussion at LendIt USA 2017 in March.
“One of the major innovations of the past few years — which has primarily been pioneered by Amazon — is the ability to watch folks’ behavior, and suggest things to them that are a better match than they could normally find themselves,” Vartanov said. “It’s in line with the consumer brand to educate folks on other vehicles, or other dealerships, or other finance offers they should be considering, based on large amounts of behavioral data.”
The California-based digital car buying company is available in 49 states. There are at least four lending partners available in each state where the platform is offered.
5. Neoverify: Looking Beyond Credit Scores
Neoverify’s unique credit assessment platform transforms the credit decision process for lenders and consumers by looking beyond credit scores and using a more comprehensive approach, data, and machine learning technology to evaluate a person’s creditworthiness.
“Upfront down payment builds a strong commitment to pay by the customer, and it is a very important tool to mitigate risk,” according to the company’s website. “By measuring the importance of down payment in past deals, future deals can be structured with the right down payment to ensure customer commitment to perform on the loan.”3 - Readers Like This Post