LAS VEGAS – Lendbuzz, founded in 2016, met with independent dealers here at the NIADA Convention & Expo to discuss its product and how it differs in its underwriting philosophy.

“Lendbuzz is an A.I.-based car financing company,” said Amitay Kalmar, chief executive officer and co-founder. “We use alternative data to do better underwriting and (help) underserved consumers.”

Amitay said the firm doesn’t rely on traditional FICO scores in its underwriting process.

“What we use are other data points that allow us to better assess credit and we focus on segments of the market that are underserved,” he said. “More specifically, where we help car dealerships are with clients who do not have a credit file, or not necessarily have a Social Security number, a tax I.D. number – a broad base of consumers who are not getting fairly treated in the market.”

Kalmar said the FICO works for those who have been in the United States or have established credit for many years. Other clients, however, who are younger or are immigrants, haven’t established a credit score.

“In that case, most vendors either do not serve them or default them to the worst credit categories,” Kalmar said. “In reality, many of them can be great clients.”

Amitay said Lendbuzz works with a wide variety of dealers, from large franchise dealerships to small used-car lots who carry 20 to 50 cars.

“We’re approaching 1,000 dealerships,” Kalmar said. “About 80% of our dealers are independents.”

Amitay said the company does well in areas where there are larger groups of immigrants who might fit the profile of underserved consumers in terms of traditional credit scoring.

“Anyone who hasn’t used a lot of credit in the past or doesn’t have a very thick file would be a good client,” Kalmar said.

Even those who have lower FICO scores – 500 and up – could be a potential client. Someone who has a medical charge-off or a credit card problem that wouldn’t necessarily be related to auto loan payments would fit with Lendbuzz, Kalmar said.

For example, he is seeing a lot of credit issues regarding medical bills, which is a life circumstance that doesn’t reflect on a consumer’s record for paying car loans.

Most of its business is done through dealers, though Lendbuzz does work directly with consumers.

“We have our own risk scoring that’s not related to FICO,” Kalmar said. “Based on that we determine the rates, which are relatively aggressive. We start from 3.9% up to 17.9% depending on risk.

“But we try to score the consumers at much lower rates than these specific segments are served in the market.”

The firm follows state rules regarding interest rates and tries to keep below state limits, as opposed to being right at state limits.

Amitay also discussed the rise in inflation and increase in interest rates.

“We had to do a small price increase in June, but basically absorbed the rest as a lender,” Kalmar said. “In terms of demand, we’re still seeing dealers sell a lot of cars.

“In terms of credit performance, we haven’t seen weakness yet. Obviously, if we get into a recession and see unemployment rates increase significantly, like everyone else we’ll see an increase in default and credit performance.

“But, as of yet, we haven’t seen that.”

He added Lendbuzz reps will guide dealers and their F&I teams so they know what segments they are looking for and which consumers would be a good fit.

Kalmar focuses on cars that are 2012 and newer, so the car is important. But the type of client is the main factor.

“We’re not only buying the collateral, but we’re definitely buying the client,” Kalmar said.

Kalmar said Lendbuzz met a lot of great dealerships in the NIADA exhibit hall and made a lot of connections.

“We’re expanding rapidly,” he said. “We always like meeting people in person so we’re glad the conferences are back.”

*Note: UCN visited with several exhibitors during last month’s National Independent Automobile Dealers Association Convention & Expo and will be sharing some interviews with different vendors.