To help keep vehicles rolling, BNPL firms offering auto repair financing are on the rise.
As proof that the concept has wheels, UK-based buy now, pay later (BNPL) firm Bumper recently raised 26.1 million pounds in a Series A extension round to help fund the growth of its vehicle repair financing platform.
By transposing the familiar interest-free installment-based financing model that has made BNPL popular in sectors like eCommerce, the lender is enabling garages and repair shops to offer accessible credit options to their customers without having to take on any additional risk.
In fact, company CEO James Jackson told PYMNTS that the solution has never been a more pressing need for used car owners in Europe, who at any time could be confronted with large, unexpected car repair bills they did not budget for.
“There’s quite a lot of stats to show that Germany, the UK and actually most of Europe are experiencing record highs in average age of vehicles, so the need for Bumper has never been more relevant,” Jackson said in a May interview.
Watch Jackson’s interview: BNPL ‘More Relevant Than Ever’ as EU Used-Car Demand Hits Record Highs
In a twist on the proposition, Nigerian startup Imalipay has launched a BNPL product specifically for gig workers that are underserved by traditional credit providers.
More than just a way to get from A to B, gig drivers’ vehicles are their entire livelihood and an unexpected accident or breakdown can end up putting them out of work.
To help those drivers pay for repairs, Imalipay provides them with a mobile app that is connected to gig platforms via an application programming interface (API).
As company Co-founder Tatenda Furusa explained to PYMNTS in an interview, by plugging into the gig platforms themselves, Imalipay has created a system whereby credit decisions are based on information income and cash flow information gathered directly from the source.
What’s more, the concept doesn’t have to be limited to paying for repairs.
“Show us who you work for, your income statements, then [ImaliPay] provides you a service tied to the nature of your gig, … you can get access to BNPL fuel, spare parts, phones,” Furusa said.
African Platforms Embrace Digital Finance
In the more familiar realm of auto financing, digital platforms are also leveraging the BNPL model to increase Africans’ access to credit and bypass less agile, bank-based lending traditions.
In the Nigerian context, the vehicle marketplace and financing platform Autochek partnered with local neobank Vbank in September to digitize the auto lending process, promising a decision on loan applications within 48 hours.
Then, in November, the South Africa-based company launched its own dedicated financial services arm to unlock even more financing options for African car buyers.
And as more and more vehicles are sold online, a growing number of digital-first credit solutions are emerging to cater to the needs of automotive eCommerce customers.
For example, Egyptian online car seller Carzami has partnered with the country’s largest vehicle financer, Contact Financial — the lender’s first such agreement with a digital platform.
As Carzami Co-founder and CPO Adham Hosny told PYMNTS in November, the arrangement has enabled the auto platform operator to offer financing with as little as a 10% down payment, lower than Contact’s in-person deals.
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