Shift goes up a gear in auto finance

Shift Technologies, a Californian start-up company which has pioneered a new approach to buying and selling used cars online, has announced it is to launch an in-house auto lending business.

The company operates an online peer-to-peer marketplace for used cars in San Francisco and Los Angeles. After sellers submit a car for sale, a company representative makes a house call to conduct an inspection, takes the car to a storage facility, and lists it for sale online.

Using data and algorithms based on previous pricing and sales, Shift guarantees a minimum price. The company handles marketing and test drives for potential buyers. Sellers are paid after the car is sold, which takes on average less than 30 days.

Shift keeps half of the difference between the minimum price it quoted the seller and the final price, meaning it has an incentive to sell the vehicle for as much as possible to maximize its commission. The company gets nothing for a sale at the minimum price.

Initially, Shift offered buyers finance for a new car via third party lenders. Now the company has announced it is launching an in-house lending business called Shift Finance which will offer car loans to Shift customers, providing a seamless experience throughout the entire car buying process.

In-house lending

The company’s financing arm will start as a pilot program in Virginia and expand to all of Shift’s markets. Shift is the first peer-¬to-¬peer car marketplace to offer direct to consumer auto loans, and will be using proprietary data and algorithms to offer tailored financing options.

Toby Russell, Shift’s head of business and product, said: “Our goal from the beginning has been to transform a broken, antiquated system by empowering consumers. Buying a car is one of the biggest financial decisions people make, yet for years consumers have been presented with confusing and unattractive loan options, led by old-¬world retail models. By focusing on technology and transparency, Shift Finance will have accurate, transparent information and excellent rates.”

Shift Finance says it will offer competitive auto loans and customers will be able to shop for cars based on their desired monthly payment plan. If for some reason a customer is unable to keep up the payments on their vehicle, they may be able to resell through Shift and find another car with a lower monthly cost.

“We’re transforming a traditionally manual and complex process into something that is digital and mobile first,” said Peck Yang, Shift Finance co¬founder and product manager. “We integrate ancillary data sources to streamline the application process and to improve underwriting decisions. This new platform is a win-¬win for consumers.”

Shift Finance will be based in northern Virginia and loans will be available starting Thursday, March 17. Last month, Shift launched a Washington, D.C. area hub and earlier this year the company announced a $20 million investment in its East Coast engineering workforce, based in Virginia. The company has raised more than $73.8 million in venture capital funding.