Cars for international students can be a surprising complicated issue. Buying a car outright can be a hassle — it’s costly, and it might just be one more thing to sell off after graduation. Leasing might seem like the ideal option, but that, said Jeff Althaus, executive vice president and general manager at Flywire, comes pre-loaded with all kinds of friction points for international students.
Depending on a student's home country, paying with a local currency or payment method can be tricky. And, many of these students, even those from affluent families, may not have a credit score that is easily interpreted by U.S. lenders.
Add to that the complicated structure of car sales between the manufacturers and the franchise dealerships, the financial department that handles financing and the fact that the car will need insurance for the entire time it’s on the road, and putting an international student behind the wheel quickly becomes a complicated and frustrating process.
It was that complication and frustration into which Volvo kept running headlong — and eventually became the reason the two firms collaborated on the International Students program. The program, which was announced Thursday (August 3), features a collaboration the pair have had in place, albeit privately, since the program's launch in March of 2017.
“Volvo was actually having success in leasing to international students coming to study in the U.S." Althaus said, "but [it] had no way to reconcile the vehicle payments as they were moving through the dealership.”
And, he added, since Volvo could not control where these students were coming from — and the company isn't all that interested in becoming an expert in cross-border receivables, to be honest — the partnership is designed as much to remove friction from Volvo as it is to enable students to have cars to drive wherever they are going to school.
The partnership was announced just in time for those international students to descend on college campuses everywhere in a few weeks.
How Does It Work?
Volvo’s program is actually pretty clever. It is remarkably similar to the experience of buying a car, just for a shorter period. A student from say, Spain, and studying at Boston University is directed from the Volvo website to one of several dealers in the area with inventory. The student selects his chosen car and lease term, and the cost of that lease is calculated. Instead of paying it out monthly over the term of the lease, Volvo’s program allows the student to pay for his lease upfront with a single payment.
And that payment, Althaus noted, also includes all necessary insurance for the term of the lease. When the term of the lease is complete, the car is returned to the dealer — no fuss, no muss. By turning that lease into a single, upfront payment, the "no fuss, no muss" also extends to Volvo and the dealerships with the inventory.
“This is just like our core business, applied to Volvo’s clever leasing use case,” Althaus said. He noted that as students from all over the world are making their selections, they are able to collect and reconcile those high-value payments — denominated to the right currency — for Volvo, down to the details that match the student and the vehicle identification number to the dealership.
Althaus said this gives Volvo complete visibility of the end-to-end transaction spectrum. Dealerships are also able to get paid faster and move more vehicles through products and promotions.
It’s a big opportunity, according to Althaus, one that — once the opportunity is understood more broadly — is bigger than the automotive vehicle industry.
The Diversity Of Needs
Even when it comes to its partnership with Volvo, Althaus noted, it is only just “scratching the surface” of what this type of international leasing program can do. In a world where people are living increasing international lives, the need to secure transportation isn’t just for the college kid use case. Expats, for example, face similar needs and issues that can be solved in the same way.
There’s a use case for travel, too, Althaus explained. Flywire's partnership with Hilton has many of the same characteristics: properties all over the world with guests from all over the world, and the need to reconcile and track payments to truly globalize them.
“It has become really interesting for us as we look at what we’ve been able to accomplish in such a short amount of time with brands like Volvo and Hilton that are using us as their receivables processing partner,” Althaus noted.