10 Innovative Startups Disrupting Mobility Finance

It’s old hat now to say that auto finance is an industry ripe for disruption because, quite frankly, it’s already happening.

From keyless carsharing technology to bringing the entire car-buying process online — including discovery, financing, purchase, and trade-ins — the shakeup of finance is well underway. Each company has a different business model and offers consumers a new experience, which highlights the expansive opportunities, growth, and surprising malleability of auto finance as consumer preferences and mobility itself, change.

Here are 10 innovative startups that are disrupting the auto finance space, and how each plans to respond to mobility trends:

1. Divido: Buy Now, Pay Later

Divido is a platform for merchants, lenders, and intermediaries that want to offer instant new credit as a payment option. Its business model allows customers to spread the cost of any purchase over a certain period while the merchant gets paid in full right away.

Divido is integrated with multiple lenders and financial service companies in multiple countries across Europe — something no other finance provider offers with a single integration, David Backshall, commercial director for Divido, told Mobility Finance. This means that Divido can scale on a global level which other finance companies just cannot do, Backshall said.

The company doesn’t see changing mobility ownership as a threat, and in fact embraces the idea that consumers have more choice, Backshall said. Divido is prepared for how people initially purchase a vehicle, he said, because the company also provides financing for consumers who want to purchase a servicing plan, extended warranty, or repair their vehicle.

“The U.K. after-sales market was worth more than [$26.9 billion] in 2016, and this is set to continue to rise the more vehicles used on roads,” Backshall said. Whether consumers own their vehicles, lease, finance, or carshare, those consumers will still need servicing and repair. Divido’s service is, “well positioned to help consumers finance their motoring expenditure,” he said.

2. Drover: SaaS-Enabled Marketplace

Drover is a car rental marketplace platform for rideshare drivers. The startup offers consumers a new kind of car rental experience targeted at rideshare drivers who typically only need the vehicle for a year or less.

Drover’s marketplace is open to any rental company, leasing provider, car dealer, or OEM to list vehicles, Felix Leuschner, Drover’s chief executive, told Mobility Finance. “These have been fleet vehicles, and we are looking at off-lease vehicles as well,” he added. “In terms of services provided, we’re — in the end — monetizing assets [cars] effectively for their owners, whoever that may be. We do that by providing a liquid marketplace that generates utilization and earnings while providing an end-to-end software solution.”

In addition, the London-based company provides flexible access to cars including insurance, through a software-as-a-service (SaaS) marketplace. Drover’s SaaS-based fleet management and rental platform allows large fleets to monetize and manage vehicles effectively with little overhead required.

3. Honcker: Mobile Car Leasing

Honcker allows customers to lease a car directly from their phones rather than the traditional method of leasing a car online, in which your personal details are entered into lead generators that are then blasted out to hundreds of dealers. Honcker, instead, flips that process by asking to see lease specials offered by multiple local dealerships.

“Additionally, and most importantly, we are the only app or website where you can complete a lease transaction — not become a lead, but actually complete the lease online,” a Honcker spokesperson told Mobility Finance.

The company is already planning for the shifts in consumer mobility behavior, by discussing with necessary partners as the auto industry evolves, the spokesperson said. “We look at ourselves as even better positioned as this happens because — do you really think a customer for an electric vehicle or [who is involved in] shared ownership will buy this vehicle at a store? It’s simply counter-intuitive. As the industry evolves, more of the transaction will go online,” the spokesperson added.

4. AutoGravity: Indirect Car-Buying

AutoGravity is a multi-lender, indirect car-buying platform. The company is building a data science team that could one day provide car and auto loan suggestions — much like Amazon, Serge Vartanov, chief marketing officer for AutoGravity, said during a panel discussion at LendIt USA 2017 in March.

“One of the major innovations of the past few years — which has primarily been pioneered by Amazon — is the ability to watch folks’ behavior, and suggest things to them that are a better match than they could normally find themselves,” Vartanov said. “It’s in line with the consumer brand to educate folks on other vehicles, or other dealerships, or other finance offers they should be considering, based on large amounts of behavioral data.”

The California-based digital car buying company is available in 49 states. There are at least four lending partners available in each state where the platform is offered.

5. Neoverify: Looking Beyond Credit Scores

Neoverify’s unique credit assessment platform transforms the credit decision process for lenders and consumers by looking beyond credit scores and using a more comprehensive approach, data, and machine learning technology to evaluate a person’s creditworthiness.

“Upfront down payment builds a strong commitment to pay by the customer, and it is a very important tool to mitigate risk,” according to the company’s website. “By measuring the importance of down payment in past deals, future deals can be structured with the right down payment to ensure customer commitment to perform on the loan.”

6. Vroom: Generating $1 Billion in Revenue

Vroom is an online direct car retailer that makes car buying and selling fast and easy. The New York City-based startup does this by selling cars directly — instead of through dealers. The company also helps its customers find the right financing option with the best rates from among their partner banks. Vroom has generated over $1 billion in revenue, according to a company spokesperson.

“Unlike competitors that use a marketplace model to connect individual buyers and sellers, Vroom owns all of the 3,000-plus vehicles it sells on its website,” the spokesperson told Mobility Finance, adding that Vroom offers free home delivery anywhere within the continental U.S. and provides a risk-free, seven-day return period with a money-back guarantee. Vroom also offers financing options from more than 30 different lenders, maximizing affordability, the spokesperson said.

When it comes to shifting with the mobility tides, the company is confident that car ownership is still a priority for Americans, given the increasing popularity of used cars in the last three years, the spokesperson said. “While ride-sharing services like Uber and Lyft have become popular, they aren’t bringing down car ownership the way many people think,” the spokesperson added. “In fact, according to a recent survey, only 8% of respondents said that ridesharing would have a strong or greater impact on their decision to purchase a car.”

7. Shift: Personal Concierge Service

Shift’s used-car marketplace makes it simple to find a car, have a test drive delivered to you, and finance and purchase a car on the spot by acting as a personal concierge service.

What sets Shift apart from the competition is the test drive, a company spokesperson told Mobility Finance. “We are the only company in this space that offers on-demand test drives for customers,” the spokesperson said. “This is important because study after study has shown that people want a test drive — especially when they are buying a used car. Test drive data: 88% of consumers say they will not buy a car without test-driving it first.”

Shift shares Vroom’s mindset that personal car ownership is still important to Americans. “Car ownership is actually going up — especially among millennials,” the spokesperson said.

8. Drive Motors: Working with Dealerships, Not Against Them

Drive Motors makes software for car dealerships to bring the entire buying process directly online in sections, thereby enabling a customer to configure options, set up a financing plan, and pay the dealer right online, Aaron Krane, chief executive of Drive Motors told Mobility Finance.

“After just one year, dealers are generating more than 1,000 vehicle orders per month on their own websites via Drive Motors’ online checkout, and they’re making over $700 more gross profit per vehicle than the showroom,” Krane said.

The company isn’t concerned about autonomous vehicles changing its business model, at least not within the next decade, Krane said. “If anything, autonomous vehicles could increase the market for private car ownership because of two reasons,” Krane said. “No. 1, the convenience will be magical to consumers, like the transition from Blackberry to iPhone. No. 2, the technology will broaden the market of those capable of operating vehicles, to include more seniors, as well as young drivers.”

9. Carvoy: Simple and Direct

Carvoy is an online platform marketplace that gives consumers a simple and direct new car buying or leasing experience. Carvoy facilitates competition among dealerships for customer business on a single platform, which also helps consumers obtain a cheaper lease or purchase, a company spokesperson told Mobility Finance.

“Along with every car’s specs, Carvoy also discloses the MSRP of each vehicle, the discounted price, the invoice, and a complete breakdown of all the price offers to allow for total transparency throughout the entire experience and no hidden fees,” the spokesperson said. “Carvoy is making car leasing as easy, transparent, and convenient as buying a pair of shoes from Amazon.”

The company is confident that as car ownership declines, leasing will become more popular, the spokesperson said. “We believe that as car ownership inevitably becomes less attractive with the steady spread of [autonomous vehicles], we will offer shorter commitments for car leases to compensate. We would even create a no-commitment, month-to-month car lease option for consumers with exclusive agreements with banks and insurance providers.”

10. AutoFi: Purchase and Finance Entirely Online

AutoFi is an online white-label, point-of-sale financing solution that facilitates financing a vehicle online. “Our entire strategy is centered on empowering those dealerships with the tools they need to make online sales a reality,” a company spokesperson told Mobility Finance. And, as ownership trends change, AutoFi can help — whether it is buying a car, leasing a car, or paying a monthly subscription for an autonomous car service.