KeyCorp has signed an agreement with Auto-By-Tel Acceptance Corp. to provide car financing over the Internet.
Key hopes the link with Auto-By-Tel, which operates a World Wide Web site that helps consumers shop for cars and financing, helps it build on an already strong auto lending foundation.
The Cleveland holding company's Key AutoFinance subsidiary serves 6,000 dealers in 45 states, and originates $3.7 billion of loans a year.
Approximately 1,900 automobile dealers participate in Auto-by-Tel.
"The Internet is becoming a stronger method of marketing and selling products," said A. E. Steinhaus, group executive of Key AutoFinance. He added that the Auto-By-Tel Internet program makes KeyCorp "more visible in the marketplace."
Such visibility is increasingly important for bankers who may be concerned about slow loan growth and competition from nonbanks.
According to the Consumer Bankers Association's 1997 automobile finance study, auto lending grew only 0.5% in 1996, while leasing increased by 33.5%.
Auto-By-Tel projects one million "serious" buyers will request purchase information through its Web site this year. Between 20% and 30% of these will request financing, based on polling done by the company.
Chase Manhattan Corp. began offering auto loans through Auto-By-Tel last November. The New York-based bank will retain first pick of the financing applications.
"Chase buys premier customers at very thin margins, so not everybody fits their profile," said W. Randolf Ellspermann, chief operating officer of Auto-By-Tel, which is based in Irvine, Calif.
"Key has a much broader profile, and its pricing reflects the broader credit risk they are taking," Mr. Ellspermann said.
