SAN FRANCISCO — Ford Motor is hoping to speed up the new car buying process with the introduction of an online loan program powered by AutoFi. Ford also is making an investment for an undisclosed sum in the Bay Area startup, which has raised $20 million since launching nearly two years ago, according to Crunchbase.
AutoFi had been working exclusively in the used car space, connecting buyers with lenders through its web and smartphone-based platform. The deal with Ford Motor Credit Company is AutoFi's first partnership with a so-called "captive" lender. Ford's credit division is focused on loans for new and leased-vehicle sales.
The program debuts through the Ricart Ford dealership in Groveport, Ohio, and will gradually expand to other dealerships across the country.
“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," Lee Jelenic, Ford Credit director of mobility, said in a statement.
AutoFi CEO Kevin Singerman said that his company's platform "will help cut the time people spend arranging financing and improve the experience dealerships can deliver for their customers."
Auto financing is both a lucrative and risky business, as in good economic times consumers take advantage of low rates on new vehicles that often strain their budgets and invite default.
According to a report last fall by credit bureau Experian Automotive, the total balance of all outstanding U.S. auto loans reached $1 trillion between April 1 and June 30, 2016, the second consecutive quarter that it surpassed that mark.
More consumers also are turning to auto leasing versus buying these days, which in turn promises a flood of off-lease used cars that will threaten critical new car sales.