Instamotor, an online peer-to-peer used car retail app and website, plans to partner with a “top five automotive buying company in the U.S. that’s aggressively moving into the space, by yearend, Val Gui, co-founder & COO, told AFN.
Earlier this year, Instamotor began a partnership with AutoPay to deliver financing options for consumers, and while the company can not yet announced the name of its new finance provider yet, the pending partnership is a sign of a larger movement in the industry toward direct lending, he said.
“Based on our conversations with very large auto financing companies, that’s a trend that a lot of them are starting to go towards,” Gui said, adding that lenders are now reaching out to Instamotor instead of the other way around.
New technology is also reducing risk in direct-to-consumer lending space, he said. Because Instamotor doesn’t send someone out to check on the cars, or bring the vehicles in for physical inspection, it relies heavily on data to verify both the vehicle and the seller’s legitimacy.
Gui explained that there was interest in direct to consumer lending before the great recession, but the risk was too high. Big data allows lenders to eliminate a lot of that risk.
“The technology is available to actually help identify the risk early on and they can now price that into any sort of loan so they aren’t taking any undue risk,” Gui said. “So, technology is actually moving them back into this space because it’s able to give them a clear picture of what they are actually doing in their direct to consumer lending.”
