Carvoy Explores Used-Leasing Trend for Product Launch
LAS VEGAS — Online new-car financing and leasing app Carvoy is exploring expansion into the used-car space, Chief Executive Daniel Yuabov told Auto Finance News.
“Used-car leasing is something we want to get involved with because it’s exciting for the dealerships,” Yuabov said. “On a [new] lease, you don’t even really need a servicing plan because you have a warranty on the first three years. Used cars are different; I assume that the used-car side is way more profitable.”
Yuabov believes that dealers will be attracted to the program because it’s another opportunity to sell servicing contracts. “You are going to have more F&I products, and on the front end [the dealer] can make a little more money,” he said. “But, you’re being very fair with your financing rate.”
Typically, used-lease providers own the collateral and operate it as a fleet. Carvoy, though, is looking to facilitate transactions without owning the cars; rather, dealerships would own the cars through fleet financing deals. Carvoy also plans to bundle the cost of servicing contracts — which it already does for new-vehicle sales — and insurance into an all-inclusive monthly price like other subscription models. However, lease terms would resemble traditional leases, as opposed to the subscription services that are becoming popular, he added.
“We’re not considering month-to-month because to make a lease viable you have to be able to estimate how much a lease depreciates over a month,” Yuobov said. “Being able to resell that for someone else is very hard.”
