Startup Shift Finance Drifts Away from ‘Traditional’ Finance Models

Shift Technologies Inc. now also offers in-house car financing through a startup pilot Shift Finance, in a bid to compete with similar platforms, such as Vroom or Carvana, the company announced in mid-March. Shift, an online car-buying marketplace, first made headlines last year when it raised more than $73.8 million in total funding from investors after less than two years of existence. 

The new Virginia-based pilot, launched on March 17, plans to expand to all of the markets that Shift currently serves, eventually transforming into a marketplace lending platform.

Auto Finance News spoke with Peck Yang, Shift Finance co-founder. Following are edited excerpts from the interview.

Auto Finance News: What is the current process forgetting a loan through Shift Finance?

Peck Yang: What buyers go through on our platform currently, is a traditional purchase process first, where you can also request a test drive. At the same time, you can apply for financing through the mobile credit application.

The initial decision will take as little as 15 minutes.  Currently, we are starting of with funding the loans with our own balance sheet. We need to prove our concept with this pilot, and then shift to a model where investors and banks will be funding the loans.

AFN: What data do you include in your underwriting?

PY: It’s pretty standard; social security, income information, housing payments, and employment info to verify income. In the future, we are looking to integrate alternative data sources to move away from traditional application model and make it a little more streamlined. Even now, we have a lot of data, both about the customer and the collateral. We are looking to include the browsing behavior of customers in our decision-making. The goal is to provide them with the best possible credit.

We have a very data and engineering-driven team – including former Google, Twitter, Dropbox and Facebook employees. With a focus on peer to peer market, we want to be able to adapt the latest innovations around integrating banking data and alternative lending data to improve the cost, customer experience, and underwriting strategies, as we continue our expansion.

AFN: What should customers expect from Shift Finance moving forward?

PY: There are 30 million car transactions in the used car space annually, and half are P2P. So, we created a marketplace to serve those buyers, with a motivation to improve upon the customer experience.

Something that’s not included within the initial pilot: we want to transform the ownership model from traditional, by allowing the customers to easily switch their car. If a customer has picked a car and had it financed through Shift Finance, and now wants to change their car – maybe because of [high] monthly payments – they don’t have to go through the loan application process again. They can easily switch their car through our system, and continue paying off their new loan.

Peck Yang will present during the Auto Finance Innovation 2016, on May 11 in Fort Worth, Texas. Learn more at www.autofinanceinnovation.com