Ford Credit and AutoFi Debut Platform for Faster, Smoother, Simpler Digital Vehicle Buying and FinancingJanuary 24, 2017
- New platform allows customers to purchase and finance a new vehicle via the dealer website; platform introduced at Ohio dealership and will roll out over time to more U.S. Ford and Lincoln dealerships
- Platform makes it fast and convenient to finance a new Ford or Lincoln at a time when many U.S. adults say they want to spend less time at dealerships, while still going to their dealer to “sign and drive”
- Ford Credit makes equity investment in AutoFi as Ford Credit continues pursuing technology to make the financing experience better
There’s a new way for customers to purchase or finance a new Ford vehicle in minutes – right from a dealership website from anywhere, on any device – through a new platform from Ford Motor Credit Company and financial technology company AutoFi.
In addition, Ford Credit has made an investment in AutoFi as Ford Credit continues pursuing technological advances to make the financing experience better.
“By combining our fast and efficient credit-decision process with AutoFi’s online capability, we are making the customer experience faster, smoother and simpler,” said Lee Jelenic, Ford Credit director of mobility. “With its experience in used-vehicle online financing and well-developed platform, AutoFi makes it easier for us to adopt new technology quickly to meet evolving consumer expectations.”
The AutoFi platform can be used now at Ricart Ford in Groveport, Ohio, and will roll out over time to more Ford and Lincoln dealerships across the United States. The introduction comes as 83 percent of Americans say they would like to spend as little time at the dealership as possible when shopping for or buying a car, according to a new survey of more than 1,000 U.S. adults conducted online by Harris Poll on behalf of Ford Motor Company. Many of those same people, however, still want to touch and feel their new vehicle before signing on the dotted line. The new platform provides the best of both worlds.
Through the dealer website, customers have a transparent and seamless purchase and finance experience from anywhere on their mobile phone, tablet or computer. Once the online part of the transaction is complete, all customers need to do is sign the paperwork when they collect their new Ford.
Consumers may shop for a new Ford in the showroom or from anywhere via the Ricart Ford website. After selecting a vehicle, they can apply for credit and receive a decision, choose the financing terms that make sense for them, and then review and select optional vehicle protection products – completely online on their own time. Customers then can review a final summary of the financing terms and schedule time to complete the transaction and pick up the vehicle.
“AutoFi’s platform will help cut the time people spend arranging financing and improve the experience dealerships can deliver for their customers, no matter where they are in the car-buying journey,” said Kevin Singerman, CEO of San Francisco-based AutoFi. “We think this will be a game changer for both consumers and dealers, and we are thrilled to work with Ford Credit to make this happen.”
“Technology is transforming just about every type of financed consumer purchase, and this new digital capability will help make that change for automotive purchases and deliver great experiences,” said Rick Ricart, Sales and Marketing vice president at Ricart Ford. “We are excited to be the first Ford dealership in the pilot.”
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About Ford Motor Credit Company
Ford Motor Credit Company is a leading automotive financial services company. It provides dealer and customer financing to support the sale of Ford Motor Company products around the world, including through Lincoln Automotive Financial Services in the United States, Canada and China. Ford Credit is a subsidiary of Ford established in 1959. For more information, visit www.fordcredit.com or www.lincolnafs.com.
AutoFi is a technology company transforming the way cars are bought and sold. The company’s platform allows auto dealers to sell vehicles completely online by connecting buyers with lenders in a fast, easy and transparent process. AutoFi’s team includes industry leaders from enterprise software, finance, automobile and consumer sectors who previously worked at companies including Lending Club, PayPal, and SunGard. AutoFi’s investors include Ford Motor Credit Company, Crosslink Capital, Lerer Hippeau Ventures, Laconia Capital Group, Basset Investment Group, Eniac Ventures, 500 Startups and Silicon Valley Bank. For more information, visit www.autofi.com.
About the Survey
This study was conducted online within the United States by Harris Poll on behalf of Ford Motor Company between November 28 and December 5, 2016, among a nationally representative sample of 1,217 adults ages 18 years and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
Chase is chasing cars.
The banking giant launched an end-to-end digital car buying service called Chase Auto Direct, an online platform where users can not only buy new and used cars but also get financing for them through their smartphones.
The service is currently available to existing Chase customers in 30 states and about 14,000 auto dealerships in the U.S. This service lets customers connect with a dealership in the Chase network that has inventory.
“Customers today are shopping for everything online, including cars,” said Bruce Jackson, head of retail lending for Chase Auto Finance. “By pairing financing with the online car shopping experience, we can provide more opportunities for Chase dealers, and make it easier for customers to get in the driver’s seat.”
Watch John Oliver’s special on the auto lending industry here.
HBO’s John Oliver has been making the rounds in finance, this time drawing attention to sub-prime auto lending. You can watch the full clip below:
Previously, Oliver took on the debt buying industry, where he actually bought $15 million worth of aged debt for $60,000 and forgave it.
If imitation is the sincerest form of flattery, Uber is paying the alternative small-business finance industry a high compliment. The San Francisco based ride-sharing company is offering its drivers some programs that closely resemble merchant cash advances.
New drivers receive part of the advance before they pick up their first fare and the rest soon after that initial ride. Clearbanc, which bills itself as a financial services provider for “the self-employed, freelancers, independent contractors and entrepreneurs,” is putting up the money. As with a merchant cash advance, drivers can choose to pay back the Advance Pay funds by directing a portion of their weekly earnings to Clearbanc, according to a blog by Rachel Holt, an Uber regional manager. In the test the companies are limiting the automatic deductions to no more than 50% of the driver’s weekly paycheck, she said. Participating drivers can still work whatever hours they choose.
If $1,000 isn’t enough to put an aspiring Uber driver on the road, the company has another plan. Through the XChange Leasing program Uber automatically deducts car lease payments from drivers’ weekly income, a company spokesperson said. A number of financial institutions work with the ride-sharing company in the program, according to the Uber website.
Applicants have to agree to what the company calls “a routine screening.” If they’re approved they receive a list of participating local car dealers. The leases are up to three years for new cars valued at as much as $20,000 and used cars worth up to $18,500. Cars can’t be more than seven years old or have more than 75,000 miles. They have to have four doors and five seat belts. Drivers put up a $250 security deposit when they receive the leased car. Typically, they might have 156 payments of $115 each for a 2013 Toyota Corolla or 156 payments of $143 each for a 2016 Corolla. California requires rideshare insurance, and Uber provides it through Farmers Insurance or Mercury Insurance.
Unlike many standard automobile leases, XChange Leasing does not have mileage caps, and drivers can exit the program by giving two weeks notice and paying a $250 “disposition fee,” essentially forfeiting their security deposit, the Uber spokesperson said. For drivers who prefer to own their vehicles, Uber has negotiated fleet discounts with a long list of car manufacturers, the company said. The deals can reportedly bring drivers thousands of dollars in savings over the sticker price of a car. Meanwhile, Uber is testing another foray into financial services. Drivers can use “Instant Pay,” an Uber debit card from Green Dot’s GoBank division, to collect the cash immediately after finishing a ride, according to Holt. The cards don’t require a minimum bank balance and don’t carry any fees, she said.
The company seemed upbeat about its new offerings. “We look forward to seeing how these pilots progress and to making innovative payment solutions more widely available to drivers soon,” Holt said in her blog of Advance Pay and Instant Pay.
But some Uber drivers don’t share that optimistic view. In fact, Advance Pay and XChange Leasing have both come under fire for what critics view as disadvantages for drivers and for the economy as a whole. Some have gone so far as to label the lease terms practices as predatory.
Uber offers Advance Pay only to new drivers, and they could receive just about as much as a signup bonus, according to a blog on UberPeople.net, a website for drivers. The author of the blog speculated that the company is using Advance Pay to eliminate the signup bonus and also to do away with its bonus for referring new drivers.
Drivers have to pay off the advance in 15 weeks, according to the UberPeople blogger. At the rate of 30 cents per mile that drivers receive in Detroit, paying back the $1,000 would require logging 3,333 miles, approximately the distance from New York to California, the blogger lamented. However, Uber pays a lower rate in Detroit than in most cities, according to statements from other drivers.
And although Advance Pay carries no interest, Clearbanc charges drivers a fee of up to $50 if they fail to pay off the advance in 15 weeks, according to published reports.
Complaints also arise with XChange Leasing, according to a website called therideshareguy.com. Dealers sometimes refuse to provide used cars for the program because they can make more money with new cars, according to the site.
If the dealers are willing to provide used cars, problems sometimes surface because XChange Leasing prohibits leasing a used vehicle for more than 105% of its book value, the site said. Cars with a reputation for reliability, such as Toyotas and Hondas, often sell for more than book value, according to the site.
Drivers have reported elsewhere that they feel trapped by the leases, many of them continuing to work for Uber just to make the payments. However, the Uber spokesperson maintained that drivers can leave the program anytime after the first 30 days. Some critics bemoan the spread of subprime auto leases, which they have compared to the subprime mortgage debacle that contributed to the Great Recession that struck in 2008. Uber prefers comparisons to Amazon, a company that has expanded by continuing to enter new businesses.
In general, Uber has met resistance repeatedly from traditional taxi drivers who find their livelihood threatened by the ride-sharing service. Taxi drivers around the world have chided Uber for failing to pay taxes, obtain taxi licenses and uphold safety standards.
Complaints aside, Uber continues to grow prodigiously and now serves riders in more than 400 cities in 70 countries, according to metrics supplied by the Uber spokesperson. Seventy-five percent of Americans live in counties where Uber operates, the spokesperson added. Globally, Uber employs 7,000 workers and 1 million drivers, the company said.
The word “uber” is defined as “denoting an outstanding or supreme example of a particular kind of person or thing, according to a dictionary entry the company sometimes cites. In German, “uber” means “across” or “above.” Many potential riders know the word “uber” from the phrase “Deutschland, Deutschland uber alles,” a line from the German national anthem that translates as “Germany, Germany above all else.” The words to the song were written during Germany’s unification, and the lyrics refer to the idea that allegiance to the nation should trump loyalty to local kingdoms. Maybe Uber should stick with its own definition of “uber.”