A Manual Disconnection
Why hasn’t the buying and selling of auto loans been automated yet?
Why can’t we create a product that monitors a lender’s portfolio and notifies interested parties when loans have been added that they might be interested in purchasing, based on a pre-determined set of criteria? Potential buyers can set up profiles with their particular guidelines, such as LTV rate, APR, seasoning, vehicle information and geography, and receive email alerts when loans matching that criteria are found. The potential buyers can click on a link in the email, log into the service, and then submit an inquiry with a potential purchase price.
As I try to stay on top of what’s going on in auto finance, I see a lot of individuals and companies posting notices about their interest in buying or selling loans. I see a few companies that have tried to automate the process of matching buyers and sellers. But mostly, I don’t see much. And I think that’s the way a lot of people like it. The secondary market for auto loans is very fragmented and private, making it difficult to find potential business partners. To me, that screams opportunity.
The potential volume of alerts would have to be managed in some way. There are something like 35,000 cars sold every day. And if a buyer is looking for loans that are at least six months old, there are a lot of loans that reach that point on a daily basis. The service is worthless if buyers receive 1,500 emails alerting them to new loans available to be purchased. The criteria would have to be narrow enough and searchable so that the buyers can find the loans they are looking for with only a minimal amount of effort. If the service is akin to driving around to seven different malls to find a prom dress, then nobody is going to use it.
Technology exists to determine the value of an auto loan. Technology exists to search a database for entries that meet certain criteria. Technology exists to send email alerts automatically. Isn’t this service just a matter of putting together all these pieces and putting a price tag on it?
In a lot of cases, finding buyers and sellers is more luck than skill. What’s stopping the industry from traveling down this road?
