Using AI to predict lender probabilities for auto financing

Carbeeza wants to connect dealers with consumers, and consumers with financing options.

As consumer expectations for a faster, smoother, and more digital car-buying process firmly takes root amid the pandemic, companies like Carbeeza are using the efficiency of an app and harnessing the power of artificial intelligence to try to accurately predict the best financing scenarios for Canadians looking to purchase a vehicle.

It is one of the latest ventures for Sandro Torrieri, President of Carbeeza, who has been involved in a number of software and hardware companies. In an interview with Canadian auto dealer, he said the company identified an opportunity to provide dealerships with a new marketplace that allows them to advertise their products to consumers.

Sandro Torrieri, President of Carbeeza

“More importantly, we will be able to derive sales and opportunities that they haven’t been able to in the past by utilizing new types of technology, conventional and new types of artificial intelligence, derived by Carbeeza,” said Torrieri. “We’re able to provide dealers with consumers that are basically ready and active to purchase a vehicle — on-demand, if you will.”

Financing scenarios are offered to all types of consumers, from super prime to subprime, and every increment in-between. Torrieri said the company will be able to deliver those consumers to dealers in an efficient and effective manner, and at a very low cost to the dealership.

With the escalating cost of consumer acquisition, due in part to a drop-off in foot traffic and an increase in online research prior to purchasing a vehicle, Carbeeza may very well be a welcome convenience, particularly as the COVID-19 virus rages on and lockdowns and other measures continue to impact businesses across Canada.

“Dealers have had to spend an incredible amount of incremental money to attract those consumers to their doorstep,” said Torrieri, adding that Carbeeza aims to help dealers cut through the clutter, attract consumers, and drive them to dealers that have the appropriate deal, “because that is what they are looking for.”

“The whole point of Carbeeza is to drive deals to the dealers,” said Torrieri.

He said the company tracks the behaviour of lenders in the marketplace and are able to predetermine which lender will finance the consumer, no matter their financial position.

They are able to analyze the lenders with the use of AI by first asking the consumer four simple questions that Torrieri said are non-identifying and non-intrusive. The tactic helps ensure there is very little drop-off from consumers, while also ensuring the company can identify the consumer and their financial position.

From there, Torrieri said they can match the consumer to a lender based on their “lender-behaviour artificial intelligence machinery engine,” which can determine which lender will finance the consumer. And although there will always be a lender to finance a consumer, the deal structure, interest rate, and term length will vary.

“Our machinery — our engine, is able to determine the consumer’s credit profile, determine the lender that will provide that consumer with financing, and what we’re able to do upfront is we’re able to tell a consumer who the lender is,” said Torrieri.

For example, for a specific vehicle type the company can provide the consumer with the number of lenders that will finance them without actually identifying them, along with the probability of finance in terms of percentage (89 per cent, 96 per cent, etc.) and the interest rate offered by each lender. Torrieri said the company will also provide information on the deal structure (such as if there will be a required down payment, co-signer, and so on). All of that information, he said, is 97 per cent accurate at the time.

“The whole idea behind Carbeeza is to make that information available and to help dealers be able to attract those consumers at a very low cost, in terms of consumer acquisition costs,” said Torrier.

Asked what the difference is between third party lead-generation companies and Carbeeza, Torrieri said the leads they deliver are provided at a “very low” cost and there is no risk, as their focus is on customers who are committed to purchasing a vehicle. There is no service charge for dealers to set up the Carbeeza service either, and no charge for uploading their syndicated data into the system or to provide that information to consumers. The only time dealers pay Carbeeza is when there is a bonafide customer transaction.

“Most people are going to look at us as a lead generation company, which is wrong, because we’re not providing leads, we’re providing sales,” said Torrieri. “We’re not looking to provide them (dealers) with a service, we’re looking to provide them with value.”

Carbeeza is a North American, currently bilingual (English and French, with Spanish to come) product that will deploy first in Canada and then in the United States. The company intends to deploy first in Alberta, and then in other provinces with approximately three-week to one-month intervals. The first launch will take place in the first quarter of 2021.

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