Ford’s auto loan unit, Ford Motor Credit Co. said Monday that it would use software developed by AutoFi Inc. to let car buyers shop for a Ford or Lincoln car and secure a loan online through its dealers’ websites. As part of the new deal, Ford Motor Credit also announced an equity investment in AutoFi, though it didn’t disclose the amount.
AutoFi operates a marketplace where dealers can select which banks, credit unions or other lenders can pitch loans to car buyers. Customers can choose among competing offers and, after they purchase a vehicle using AutoFi’s service, the company gets paid a fee by both the dealer and the lender.
The auto-loan market expanded rapidly since the financial crisis, surpassing $1 trillion in outstanding balances for the first time in 2015, according to the Federal Reserve Bank of New York. During the third quarter, lenders extended $150 billion in auto loans, tying a record, according to the Federal Reserve Bank of New York.
Other fintech companies are also eyeing the auto-finance market. In August, car-buying firm TrueCar Inc. announced a deal with J.P. Morgan Chase & Co. to simplify the process of finding a vehicle and getting an auto loan online. In October, online lender LendingClub Corp. announced it would start refinancing outstanding auto loans for borrowers.
