Valerie Cusco said her husband warned her not to fall for a scam. She really, really wanted a new car. And her birthday was coming. And she didn’t want to wait. And she was excited. So she surrendered all her personal information and, well, it turned out OK.
“I was shocked. I just started looking into auto financing and I felt like that ad with the guy getting a loan in his underwear," she said. “I didn’t think it was real. Then I bought a 2017 Ford Edge Titanium model with a sunroof, leather seats, navigation and 17,000 miles on it."
Cusco was just casually car shopping on her phone when she stumbled across AutoGravity. She is among the 150,000 people a month nationwide flocking to the free app that allows smartphone owners to qualify for auto loans before going to a dealership.
How does it work? A consumer downloads the app, follows prompts to select a new or used car, lease or buy, choose loan payment options, list a trade-in if there is one, select a dealer, scan a U.S. driver's license to input personal data, enter work history and input a Social Security number so lenders can pull credit history. It’s a "soft" credit hit that doesn't damage a credit rating, and up to four financing offers pop up on the app. A reference number is provided with approval to take to the dealer.
The technology is already being embraced by dealers.
“We partner with AutoGravity. It creates a transparent and frictionless process,” said Scott Crompton of Ann Arbor, who handles marketing for 40 dealerships around the country that sell Honda, Toyota, Nissan, Ford, Chevrolet, Chrysler, Dodge, Jeep and Ram.
He and others said dealers dread running a credit check and delivering bad news.
“Now people come in off that tool and already have approval from a specific bank," he said. "There’s nothing else in the purely mobile space where you can get a specific car with a specific VIN and get approval before going to a dealership.”
Crompton said, “We’ve had people come in and they have approval for our new Honda Accord and we can confirm that approval, set up the payment structure and they drive home.”
If a deal closes, AutoGravity is paid fees by auto dealers and lenders.
“We’re immediately breaking down car costs into monthly payments,” said Andy Hinrichs, CEO of AutoGravity. “With 85% of all new cars financed, this cuts time for shoppers and dealers. They can pull up the paperwork in their system and move ahead with physically signing papers.”
The Irvine, Calif.-based financial tech company was founded in 2015, launched its app in 2016 and went national in January. More than a million users nationwide have sought more than $1 billion in financing, Hinrichs said during a recent visit to Detroit. Thousands of people have used it in Michigan.
“People are all about instant gratification," he said. "They want to know their options now."
A car financing process that can take hours is now cut substantially. “We allow dealers to do what they do best,” Hinrichs said. “We have over 2,000 dealer partners. Think of this like Travelocity or Expedia. We are brand agnostic and lender agnostic.”
Hinrichs has a background in Motor City expertise, having lived in Northville from 2004-11 working for DaimlerChrysler Financial Services and Mercedes-Benz Financial Services. From 2008-11, he was vice president of marketing for Mercedes-Benz Financial Services. From 2011-15, Hinrichs oversaw a loan and lease portfolio of $5 billion in transactions for Daimler Financial Services in Asia.
“I know enough to be dangerous after more than 20 years in auto finance industry,” said Hinrichs, who is not related to Ford executive Joe Hinrichs. “At Mercedes-Benz, we were the first in the world with customer finance apps to manage accounts and make payments.”
Consumers buy 17 million new cars and more than 20 million used vehicles annually. The app is available in all states except Nevada.
“If you can be successful in the U.S., you can be successful anywhere," Hinrichs said. "This is the toughest market. We went to California because it’s at the forefront of digital innovation.”
AutoGravity is seeing more than 150,000 new visitors a month.
The majority of users live in California, Texas, Florida, New York and Georgia. Most are looking at Chevrolet, Dodge, Ford, Jeep and Nissan vehicles.
AutoGravity has built and maintains a massive database of consumer auto preferences, dealers and vehicles on the market. No credit information is kept. No information is sold. The Daimler Group provided the seed funding for AutoGravity and then Volkswagen invested this year.
Industry observers are curious to see how the technology will impact consumer behavior.
"The finance business is ripe for disruption as we move to being able to do things such as get a mortgage through an app or buy a cup of coffee without breaking out a credit card,” said Dave Sullivan, a product analysis manager at AutoPacific Inc. “Consumers are more informed than ever about the car they want to buy or lease before they walk into a dealer.”
Andrew Gilleland, vice president of sales and dealer development for Lexus, said change is underway.
“Today, people make less than 1½ visits to a dealership, whereas 10 years ago it was about five visits,” he said. “The customer is shopping and deciding about the products online. Your job as a dealer is to work with the customer the way they want.”
Geoff Robinson, vice president for Mercedes-Benz Financial Services based in Farmington Hills, said, “The majority coming to us through this platform are new to our brand.”
Cusco, 53, a medical device project manager from Hollywood, Fla., said a few hours after completing the application process, she received approval for $28,500. She went with a Flagship Financial Services loan. She presented the information to the dealership and traded in a 2010 Toyota Corolla. (Cusco said her loan rate is lower than what her daughter recently found for her new Land Rover.)
“I drove the car right off the lot," Cusco said. "I was shocked it was so easy.”