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Fintech Platform Changing The Game in Used Auto Finance – Yahoo Finance

Photo by Oziel Gómez on Unsplash

Frustrating customers and dealers alike, the traditional way of securing a loan to buy a car maddens borrowers. The system can take too long, reduces the pleasure of actually buying the vehicle, and adds to the hassle for the seller.

That’s where Connecticut-based company Automatic USA steps in to smooth out the whole process. It cuts the time looking for financing to a matter of minutes rather than the hours typically spent by exasperated customers and dealers across brands — like Ford (NYSE: F) and General Motors (NYSE: GM) — and the country.

The company currently supports more than 850 smaller-sized used vehicle dealerships across 13 states using a platform that offers software enabling immediate access to all the information and data needed to take out a loan securely and quickly. Saving time satisfies the customer and enables dealership staff to move on to other business with other customers more quickly, thus improving its efficiency.

“Using Automatic is a really intuitive encounter,” says CEO and co-founder Eric Burney. “And it’s efficient. Automatic lays out a single source of clear options and digitized data that many of these family-run auto dealerships can get behind and trust.”

It’s Big Out There

The national market is big, totaling approximately $800 billion in loans, amounting to about 10% of all U.S. household debt, behind only student loans and mortgages. And the opportunities could be getting bigger as more customers in a COVID-19 world demand easier digital solutions as well as the ability to do business remotely, even when it comes to buying a vehicle.

“The CV19 pandemic accelerated digital-first innovation in the auto industry and increased demand for used cars,” the company has said in its pitch documents to potential investors.

And it seems to be working. So far, Automatic USA has raised approximately $1.3 million in its Wefunder crowdfunding project. The target is $20 million raised, and the minimum investment is $100.

COVID-19 Exacerbates Trend

Burney, with 18 years experience in the auto trade and an existing network of about 2,000 dealerships from his time in the industry, says the sector hasn’t evolved since 2001. The combination of a fragmented and frustrating status quo plus the pandemic provided a perfect window to have launched the company and raised the necessary funds, he says. It also helps to have a strong management team.

“The competitive advantage of Automatic is that it was built by people in the auto industry,” he says.

With used car sales also historically doing well in times of slower economic growth, the time might be right to invest, says John Liu, Automatic USA CSO, and co-founder.

“When you have macro trends that are pushing for adoption of digitization, pushing for high used car sales, now is the time to join,” he says.

Everybody Wins?

Everybody wins when customers are happier with reduced wait times while dealers enjoy improved efficiency.

“Having one portal makes it a lot more efficient for us to get our auto approvals so that you can get right back to the customer and you don’t have to keep shopping around to try to find that best rate,” says Andrew Ladyga, owner of Connecticut-based Eagleville Motors. “We can pay off our loans quicker, we can buy more inventory faster and we can replenish the stock that we have.”

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