There’s a new auto finance company gearing up to enter the market.
Dallas-based Musa Auto Finance, which specializes in new- and used-vehicle leasing, is taking the steps to become a full-spectrum auto lender, Founder and Chief Executive Jeff Morgan told Auto Finance News.
Musa Auto Finance was created to fill a hole in the auto finance market — namely, to provide used-car leases. “When you walk into a franchise dealership, they didn’t have any good way to calculate a lease on a used car that was simplified,” Morgan said.
To that end, Morgan partnered with Crestline Investors and turned to Goldman Sachs to secure a $150 million credit facility to begin originating leases. “We blew through that facility in less than 45 days,” Morgan said.
“As we were getting into the market, I realized we were getting 67% new-car penetration versus used,” Morgan said, adding that a lack of technology presented used-car dealers with a hurdle to overcome. “New-car dealers have the ability to calculate leases through OEMs, and they’re familiar with that. Used-car sales managers didn’t really have a way to do that with a used cars.”
In response, Musa created a technology platform that allows dealerships to calculate leases, along with sales tax and used-car tax, nationwide in all 50 states. That same technology helped Musa score a partnership with Tesla Motors last year.
Now, Musa is looking to become a full-spectrum auto lender. “Our biggest hurdle right now is funding capacity,” Morgan said, adding that the auto lender is “entertaining conversations with RouteOne, JPMorgan Chase, and a few others” to raise funding capacity north of $1 billion.
On Wednesday, Canadian-based PowerBand Solutions, a publicly-traded, online automotive auction, remarketing, and vehicle acquisition and sales platform, agreed to acquire 60% of Musa Holdings LLC, Musa Auto’s parent company. That acquisition is subject to the approval of the TSX Venture Exchange, the stock exchange in Canada. Morgan hopes the deal will be approved by week’s end. Musa is also in talks with TD Bank Canada to bring its product to dealerships in Canada, Morgan said.
Looking forward, Musa hopes to venture into direct-to-consumer vehicle purchase financing, as well as into the online consumer-to-consumer marketplace. “The ultimate goal is to have several companies come together to offer a complete solution,” Morgan said. “We want you to be able to trade your car, finance your car and find your car all in one place,” he said.
“Right now, our main focus is our dealers,” Morgan said, adding that Musa is partnered with more than 500 dealers in 33 states and hopes to add 15 states to that list by the end of the year.
