A new app aims to modernize the automobile financing process by allowing car shoppers to get credit approval on their phones.
The app, from a startup called AutoGravity, is still in its infancy. But on Wednesday, the Irvine, Calif., firm announced that Mercedes-Benz Financial Services USA had become the first auto finance company to start making loans through the app.
For now, only Californians can arrange their auto loans through AutoGravity. And because Mercedes-Benz' financing arm is the only lender currently on the platform, only a sliver of U.S. auto buyers can arrange financing their mobile phones right away.
But AutoGravity, which was founded in late 2015, has plans to expand nationwide over the next 12 to 18 months. Company officials also said that announcements regarding partnerships with additional lenders are coming soon.
"What we are bringing to the table is a digital consumer experience that so far is unknown in the car finance industry," Andy Hinrichs, AutoGravity's founder and chief executive officer, said in an interview.
"We believe that if a service or product does not exist on their smartphone, a millennial will not make that part of their life."
Other companies are also seeking to update the auto lending experience for the iPhone age. San Francisco-based AutoFi bills itself as offering the first point-of-sale financing product for auto e-commerce. This week, AutoFi and PricewaterhouseCoopers released a report on how to re-imagine the experience of taking out a car loan.
"Some progressive dealers and manufacturers are already beginning to re-think the car-buying experience, offering both new online capabilities and in-dealership tools such as virtual reality," the report states. "However, at most dealerships, the auto finance process of today looks much like it did several decades ago — paper-based manual, and completed behind the scenes."
AutoGravity plans to partner with both lenders and local car dealers, and will get paid by both parties when consumers take out loans through the company's app.
Car shoppers will be able to choose from up to four loan offers, according to AutoGravity. The idea is to let the consumer select from some of the loan offers that get made — whether by banks or the financing arms of auto makers — when car buyers seek financing at a dealership.
It should come as no surprise that Mercedes-Benz Financial Services is the first lender to test-drive the AutoGravity app. AutoGravity received seed funding from the Daimler Group, Mercedes' parent company.