Vroom Announces $296M Loan Securitization

Online used car buying and selling platform Vroom has unveiled the pricing of its first auto loan securitization offering of $296 million, the company said in a news release Thursday (Feb. 10).

Vroom said the securitization is a private offering, which will see its recent acquisition of the vehicle finance company United Auto Credit Corporation (UACC) selling approximately $281.35 million of its rated notes.

“This transaction is an exciting first step in integrating UACC’s strong reputation and AAA ratings into Vroom’s long-term strategic goals,” Paul Hennessy, CEO at Vroom, said in the news release.

Eventually, Hennessy said, UACC’s in-house financing capabilities will let Vroom provide “a superior digital car buying and lending consumer experience, offer new ways for existing partners and new investors to access Vroom’s loan portfolio and allow us to fully participate in loan economics, transitioning Vroom from a 100% indirect model to a fully captive model which has the potential to accelerate our sales velocity and deliver a significant gross profit improvement for our shareholders.”

Read more: Auto eTailer Vroom Completes Acquisition of United Auto Credit

Vroom said the transaction is UACC’s 13th securitization and its first since Vroom closed its acquisition of the financing firm Feb. 1.

Hennessy said last week the purchase was crucial to helping Vroom create a “captive finance business that allows us to service customers across the credit spectrum” and help it access additional commerce solutions.

“By integrating an automotive lender like UACC, with rich expertise in the non-prime space, Vroom will be able to serve a broader portion of the customer base,” Hennessy said. “We believe this will translate to greater efficiency on our marketing efforts and allow us to scale the business faster.”

The deal saw more than 500 UACC employees join Vroom, including UACC CEO Jim Vagim and chief financial officer Ravi Gandhi. Vroom said Vagim will continue operating UACC’s third-party finance business, while Gandhi will play a key role in Vroom’s captive finance arm.