Online used-car retailer Vroom is expanding its finance capabilities via two separate partnerships with the largest auto lending banks in the industry.
Vroom and JPMorgan Chase Bank will be launching its co-branded finance arm, Vroom Financial Services by Chase, April 1, Paul Hennessy, chief executive at Vroom, told Auto Finance News. The financing agreement has been live since October.
The launch of the Vroom Financial Services business comes amid an industry shift to provide fully digital car buying and financing options for customers. While the industry’s digital evolution is nothing new, the coronavirus pandemic has accelerated digital financing among most lenders.
“Like most businesses, including automotive retail, we saw some material softening of demand as the crisis unfolded,” Hennessy said, without providing figures. “Given our e-commerce and delivery model, we have seen a new and relatively steady baseline of consumers buying cars for the past few weeks.”
In a separate partnership, Ally Financial has doubled Vroom’s floorplan line of credit to $450 million, the companies announced today. Ally will serve as Vroom’s exclusive floorplan financier, Hennessy said. While the commercial agreement between the two only covers inventory, Ally Financial still serves as one of the retail lenders on Vroom’s platform.
The partnership comes on the heels of Ally’s expanded partnership with used-car retailer Carvana. Last week, Ally doubled Carvana’s line of credit to $2 billion.
Yet, while the partnerships come in the midst of the coronavirus outbreak in the U.S., increasing the various touch points through which Ally is able to reach consumers isn’t a new strategy for the lender, a company spokeswoman told AFN.
“These are continuations of relationships we’ve already had with Vroom and Carvana,” she said. “Our strategy has been and will remain to have an unwavering commitment to supporting all our dealer customers, especially during those times when they need us most.”
Vroom’s Hennessy confirmed that discussions between the Detroit-based lender and the online retailer began “before the current crisis in the normal course of expanding Vroom’s ability to acquire vehicles.”