Vroom buys auto lender United Auto Credit for $300M to offer financing options for its used car shoppers
Online used car retailer Vroom announced Tuesday that it would buy automotive lender United Auto Credit Corp (UACC) for $300 million in cash. Vroom said the acquisition will enable it to offer financing options for its shoppers. Vroom also said United Auto will retain its brand name and the deal is expected to close by the first quarter of 2022.
As part of the acquisition agreement, UACC, which currently has over 7,300 dealership customers, will join Vroom’s existing lineup of world-class lenders available through its eCommerce platform while both teams work to integrate UACC’s services and develop Vroom’s captive financing operation.
In a statement, Vroom also added that integration of UACC’s non-prime lending capabilities will give more consumers the opportunity to seamlessly transact on Vroom’s platform as they look to purchase their next vehicle without ever leaving home.
We covered Vroom back in 2019 after the online used car retailer secured $254 million in Series H funding to accelerate growth. The funding coupled with the latest acquisition underscores Vroom’s momentum in disrupting the retail used vehicle business.
Meanwhile, Vroom said that Jim Vagim, President and Chief Executive Officer of UACC, and Ravi Gandhi, Managing Director and CFO of UACC, will remain in their positions following the acquisition and play a key role in the integration and execution of Vroom’s captive finance strategy.
“Competitive financing is a fundamental component of Vroom’s value proposition and adding proprietary lending capabilities unlocks significant value for our business and our customers,” said Paul Hennessy, Chief Executive Officer at Vroom. “We were impressed with the UACC team’s depth of expertise, as well as their commitment to their customers, and are thrilled to have them as part of the team as we advance our lending offering and continue our asset-light approach to scaling our business. The transaction represents a meaningful strategic opportunity, with significant potential for enhancing aggregate gross profit and improving customer satisfaction.”
Founded in 2013 by Kevin Westfall, Marshall Chesrown, and Scott Chesrown, the New York City-based Vroom is an online platform that enables individuals to buy, sell, and trade-in refurbished used cars in the United States. Its smartphone application allows its users to filter their searches by body type, year, price, mileage, and make, and get the purchased car delivered right to their doorsteps.
The company also helps its customers find the right financing option with the best rates from among their partner banks. Users can browse through to find a suitable car and get it delivered to their homes for a seven-day test drive before purchasing their own vehicle.
Through its eCommerce platform, Vroom offers thousands of low-mileage, reconditioned vehicles with delivery directly to consumers. It also arranges financing through leading lenders and offers a warranty, insurance, and other value-added products that provide convenience for its customers. Vroom recently announced a strategic, preferred lending relationship with Chase Auto, designed to bring unique value to both companies’ customer bases.
In addition to offering consumers a better way to buy a car, Vroom’s Sell Us Your Car® offering allows customers who wish to sell or trade-in their vehicles to receive real-time appraisals, attractive market-based pricing, hassle-free loan payoffs, and convenient, at-home vehicle pickup.
Founded in 1996, UACC is a nationwide technology-enabled non-prime auto lender serving the independent dealer market. UACC is based in Newport Beach, CA, Ft. Worth, TX, and Buffalo, NY.