The online, direct-to-consumer (D2C) marketplace will use a soft credit pull and enable shoppers to focus on cars they can afford, the digital commerce technology provider and the consumer finance company said in a Wednesday (Jan. 18) press release.
“The market dynamics of the past 12 months, including rising interest rates, further underscore the importance of these solutions in ensuring consumers are matched with cars and financing they can afford,” AutoFi CEO and Co-founder Kevin Singerman said in the release.
The announcement comes at a time when the share of United States consumers paying at least $1,000 a month for a vehicle reached a record high of 16% in the fourth quarter of 2022, up from 10.5% in the same quarter in 2021 and 6.7% in the fourth quarter of 2020, according to car shopping guide Edmunds.
Edmunds said Jan. 4 that consumers were shielded from questionable financing decisions by the low interest rates and high trade-in values seen early in the pandemic.
“But as we shifted toward an environment with diminished used car values and rising interest rates over the past few months, consumers have become less insulated from those riskier loan decisions, and we are only seeing the tip of the negative equity iceberg,” Edmunds Director of Insights Ivan Drury said at the time.
At the same time, car dealers have been in a gloomy mood as they see the impact of the state of the economy and interest rates.
A survey by Cox Automotive found that U.S. auto dealer sentiment in the first quarter of 2023 is at its lowest level since the start of the pandemic, with more dealers seeing the market for cars as weak than those who see it as strong.
The marketplace that is soon to be launched by AutoFi and Santander was piloted in late 2022 and is an extension of an existing partnership between the two companies, according to the press release.
Earlier in the partnership, the two firms debuted a digital experience that enables dealers to identify cars that fit the shopper’s budget, offer solutions that best meet the shopper’s needs and complete the deal, the release said.
“The digital innovation created by partnering with AutoFi has not only enhanced business but allowed Santander consumer to provide better service to our dealer customers and consumers,” Bruce Jackson, president of Chrysler Capital and Auto Relationships for Santander Consumer, said in the release.