Used-car leasing app Fair launched last month, which the founders are calling an “iTunes account for your car” offering an all-in-one monthly payment model. And just a few weeks ago, the startup released a demo video showcasing its innovative business model.
In short, Fair is buying used cars from dealerships and charging consumers to drive that vehicle for however long they desire. There is a lot of technology that goes into the pricing, which includes insurance, maintenance, and roadside assistance, and the price can run as low as $150 to $300 per month.
The company does a soft credit pull that doesn’t impact a user’s credit score and models an affordability index based on the statistic that the average consumer will spend 14% of their gross income on the mobility category — half of which is the car payment. There is no lease term as consumers can cancel on a week’s notice.
“The patterns are clear, cars depreciate in a predictable way,” Scott Painter, Fair co-founder and chief executive, told Auto Finance News last month. “Cars depreciate aggressively in earlier years and less in out years. It turns out, when you start looking at all the data you realize, ‘Wow, modern vehicles really don’t depreciate to much less than 10% of the original retail selling price after a decade.’ So it’s not depreciation to zero, it’s depreciation to about 10% to 15%. We began to model that data.”
Fair is also hoping to take advantage of the current used-vehicle market, which is depreciating amid high volumes of off-lease vehicles and could put pressure on the new-vehicle space.
To hear more about Fair’s model, check out the 17th annual Auto Finance Summit, where the startup’s co-Founder Georg Bauer will give a presentation on “The Mobile Landscape in Big Auto.” The conference will take place on Oct. 25-27 at the Wynn Las Vegas.
Check out the startup’s demo video below: