Upstart broadens AI-driven business into auto financing
Artificial intelligence continues to work its way into auto financing.
On Wednesday, Upstart, a leading AI lending platform, announced support for auto financing as part of its consumer lending platform. With Upstart’s new service, the firm highlighted banks can offer refinance and purchase financed contracts with a seamless digital experience, higher approvals and potentially lower loss rates — all enabled by AI.
Upstart explained in a news release that its new service can eliminate the need for consumers to track down and enter their VIN or license plate number. Banks no longer need to manage detailed paperwork including title transfer, lien placement, or payoff of the borrower’s existing installment contract (in the case of refinance).
Upstart’s AI model for auto financing builds off its personal loan model, which has shown itself to be five times more predictive than FICO during the COVID-19 pandemic, according to an internal study by Upstart.
Upstart’s auto model combines a time-delimited probability of default (or prepayment) with the vehicle’s modeled residual value to generate a custom financing offer for each applicant.
In addition, thanks to Upstart’s seamless digital experience, banks can achieve Net Promoter Scores (NPS) scores far higher than published benchmarks for the largest banks. The Net Promoter Scores for its bank partners’ current lending programs are approximately 80 compared with less than 30 NPS at top-tier banks, based on a survey of loan applicants administered by a third party.
Features of Upstart’s auto platform also include:
— Bank branded, mobile-friendly application that allows users to finish their application in one sitting
— Seamless vehicle lookup via integration with DMV records without requiring VIN or license plate from applicants
— Risk-based AI model prices customers within the bank’s credit and vehicle policy resulting in higher approvals and lower losses
— Automated fraud and verification of customer application information mean borrowers can finish their application in as little as 20 minutes
— Integrated title management including placing and releasing liens plus transferring titles
— Seamless disbursement of funds either to dealerships, the borrower, the prior lender (for refinance)
“Personal loans were the right first step for AI lending — now, we’re expanding to auto,”, of Upstart co-founder and chief executive officer Dave Girouard said. “The days of randomly priced auto loans with confusing and laborious processes both for consumers and banks are nearing their end.”
For more information, visit www.upstart.com/for-banks/auto-loans/.