Ally Financial Inc. and online used-vehicle retailer Carvana have expanded their relationship to include vehicle financing, effective late last month, Ally said today.
Ally Financial will finance up to $600 million in Carvana’s retail contracts over the next year.
“We are very pleased to be expanding our relationship with Carvana, and continuing to develop innovative financing solutions that help businesses succeed in the online channel,” Tim Russi, president of Auto Finance at Ally, said in a statement.
“As the industry evolves, Ally is committed to providing products and services for new business models in the online channel, and also to applying key technology and learnings to help our dealers improve the ease and efficiency of their financing transactions with customers,” he said.
Ally doubled Carvana’s floorplan credit line last year. It also helps Carvana source its used-vehicle inventory through Ally’s SmartAuction platform.
Under the new agreement, Ally will make an initial commitment of up to $600 million through financing and bulk purchases of contracts, the statement said.
Carvana’s shopping experience enables customers to choose financing terms and monthly payments online. Under the financing agreement with Ally, the companies will have a “flow relationship,” Russi told Automotive News. “They’ll originate, and we will be on the back end.”
“Obviously, Carvana’s positioned themselves as an innovator and market leader,” he said. “As they grow, our ability to partner with them grows, and that’s fantastic.”
Ernie Garcia, Carvana founder and CEO, said in the statement that the agreement with Ally will support Carvana’s origination growth and plans to expand. Carvana, of Phoenix, was founded in 2013. It operates in 21 markets and plans to expand to additional states over the next few years, the statement said.
“As we look to enter new cities, this relationship will help us to easily accommodate more volume, while maintaining the seamless customer experience that we are known for,” Garcia said.
Russi said Ally and Carvana are also exploring other opportunities to expand the relationship. With Carvana, “we are open to exploring [and] focusing in on the customer experience.”
Carvana customers have the option of having their vehicle delivered or picking it up from the company’s multistoried, glass-structured, automated “vending machines” in Nashville and Houston. The retailer provides customers a special coin to insert.