Cars.com Moves Into Auto Finance With Acquisition of FinTech Platform CreditIQ

Automotive marketplace platform Cars.com (CARS) announced on Thursday (Nov. 4) that it has signed a definitive agreement to acquire automotive FinTech platform CreditIQ.

This move will enable instant financing for consumers, dealers and lenders, and will build additional revenue streams for Cars.com, the company said. By facilitating entry into the auto finance market, the acquisition will expand CARS’ total addressable market (TAM) beyond the auto advertising and dealer technology markets in which it operates today.

“This latest technology addition to our scalable platform represents our entry into the fast-growing, multibillion-dollar auto finance segment, which aligns with our vision of creating a frictionless omnichannel experience for buyers and sellers,” CARS President and CEO Alex Vetter said on Thursday (Nov. 4) during a call with investors and analysts. “We’re excited to participate in this market with a powerful digital solution that better allows lenders to compete for car loans online, saving consumers time and helping to bring transactional capabilities to our dealer partners.”

Delivering Preapproved Loans

Following the acquisition, dealers will gain access to CreditIQ’s advanced digital financing technology, which facilitates the completion of the finance process online across the CARS platform via Dealer Inspire’s 5,200 websites, its digital retailing platform Online Shopper and the Cars.com marketplace. The technology also offers automated lender decisions from dealers’ preferred lender networks, which CARS said is a differentiator in the market specific to the CreditIQ offering.

“Dealers will be armed with preapproved loans, saving them valuable time in their finance office, enabling them to drive greater dealership efficiencies and enhance customer experiences,” Vetter said during the call.

Consumers will have access to the new interactive online loan screening and approval marketplace that provides instant finance offers and enables a complete buying transaction from their own homes.

Alleviating a Key Pain Point

“By using this technology, consumers can be preapproved online and secure financing from the comfort of their home, alleviating a key pain point in their car shopping journey,” Vetter explained.

Lenders will get access to a large audience of in-market car shoppers. CARS reports that it gets 142 million visits at Cars.com and 247 million visits across Dealer Inspire dealer websites each quarter.

“CreditIQ has built cutting-edge auto finance technology that will leverage the massive audience of high-intent, in-market car shoppers that visit the CARS platform and will enable us to generate incremental revenue from a new set of customers — lenders,” Vetter said.

Creating a Lender-Based Revenue Stream

For CARS, the acquisition will expand its digital solutions, create a new lender-based revenue stream and increase CARS’ attribution, the company said in a presentation released with the earnings call.

“One of the direct benefits of this acquisition will be the improved sales attribution,” Vetter said. “By helping dealers source more sales linked to CreditIQ technology, we will further demonstrate Cars.com’s overall sales effectiveness.”

CARS expects the CreditIQ technology to be integrated across the CARS platform in the first quarter of 2022. The company will monetize the platform upon rollout, generating revenue directly from lenders on a per-transaction basis.

CreditIQ has also built a Lending-as-a-Service (LaaS) framework that enables dealers, marketplaces, OEMs and automotive software providers to use the same advanced FinTech capabilities.

CreditIQ CEO Bill Liatsis said in a press release, “We are excited to join forces with a company that shares our dealer-centric approach, helping retailers better compete by the use of better technology. Integrating with the CARS connected platform allows us to continue to equip a much broader audience of consumers, dealers and lenders to be successful in the growing digital financing sector.”