Chase Auto Finance has formed an exclusive Internet relationship with Auto-By-Tel Corp. to provide on-line financing.
Since February 1995, Auto-By-Tel has operated a World Wide Web site that matches prospective new car buyers with local car dealers. Approximately 1,500 dealers have contracts with Auto-By-Tel, and an additional 500 dealers use the site on a trial basis.
"We believe this transaction is compelling for customers because it provides them one-stop shopping for their car and financing," said W. Randolf Ellspermann, chief operating officer of Auto-By-Tel Acceptance, the financing subsidiary of Auto-By-Tel Corp.
Chase is not the only bank looking on-line for car buyers. Last month, NationsBank Corp. began prospecting through Automatic Data Processing Inc.'s AutoConnect Web site.
According to a recent survey from J.D. Power and Associates, cyberspace could soon be the place to be for banks looking to expand auto lending.
The 1996 Automotive Performance, Execution, and Layout Survey indicated that 68% of new car buyers also are computer owners, though only 10% use their computers to shop for new vehicles.
While the Internet on the whole may still seem an uncertain marketplace, Auto-By-Tel reports some compelling results from its site.
In October, Auto-By-Tel received almost 42,000 purchase requests, and about 75% of these customers needed financing in order to purchase vehicles, Mr. Ellspermann said.
"Based on the closing ratios we believe exist, last month alone there would have been somewhere between $200 and $400 million worth of car sales through the Auto-By-Tel process," Mr. Ellspermann said.
A consumer using Auto-By-Tel fills out a purchase request on the specific kind of vehicle wanted. This information is sent via fax to participating dealers.
Auto-By-Tel then faxes the loan applications to Chase for processing. "From our perspective, it will look like another dealer," James B. Brew, president of Chase Auto Finance Corp., said.
When the process becomes electronic in first quarter of next year, Chase expects to be able to approve loans in a few minutes for most consumers, Mr. Brew said.
Using an application system to process inbound loans, "we are capable of auto decisioning or using scoring methods for upward of 35% of the applications coming through. By year's end, we'll be around 50%," Mr. Brew said.