Mechanics work on cars at the service center of Brent Brown Toyota in Orem, Utah, U.S. Seattle-based ... [+]
Among the many expenses some consumers have had to defer during the Covid-19 pandemic and economic downturn are unexpected repairs to their vehicles. Stuck for big service bills drivers either coughed up the cash, if they had it, run up large credit card balances and risk being on the hook for interest, or simply forego the repairs and do without their vehicles, possibly putting their jobs in jeopardy.
Seattle-based DigniFi was founded in 2013 in Boulder, Colo. to solve that dilemma. It’s essentially a platform to put consumers together with lenders through client dealerships and service centers for low-cost repair loans.
The average payment is about $75 a month over the course of 12 to 36 months according to CEO Richard Counihan.
According to a study by the AAA, prior to COVID-19, 64% of Americans could not pay for an unexpected car repair without taking on debt, with the average repair bill ranging from $500-$600.
This week DigniFi reported millions in new funding that Counihan says will give it the ability to offer cash-strapped consumers added access to his company’s low-cost repair loans.
Richard Counihan, CEO Seattle-based DigniFi, a platform for providing low-cost loans to consumers ... [+]
“We signed agreement with (global investment manager) Neuberger Berman to purchase up to $275 million in loans we originate, so now we have lots of capacity,” said Counihan in a phone interview. “We will now use funds to add additional lenders to the platform and we will add other commitments going forward to make sure we never run out of capacity.”
In addition, DigniFi said it has raised $14 million in Series A funding from Austin, Texas-based BuildGroup and Exor Seeds, the venture arm of Exor N.V., the holding company of the Agnelli family, which is the controlling shareholder of Fiat Chrysler Automobiles, Ferrari, CNHI, PartnerRe, and Juventus).
“The primary use of the funds is to grow and acquire new service centers and to invest in technology of the platform to ensure we sort of use our machine learning leverage to match lenders to the consumer to make the appropriate loan,” explained Counihan.
DigniFi is currently in about 5,000 service centers and looks to grow its footprint.
As more dealers and their service centers reopen, Counihan expects customers who have put off having their vehicles repaired will bring in their cars and trucks for service, putting new urgency to having low-cost financing available.
Indeed, he reports DigniFi has added 500 stores to its network bringing the volume of loans up to nearly pre-pandemic levels as people return to work and start thinking about taking driving summer vacations.
A DoorDash Inc. delivery person arranges an order in the back of a vehicle outside of a DoorDash ... [+]
The need for social distancing has also caused an explosion in home delivery services employing mainly independent individuals. For the most part they drive their own vehicles and are responsible for maintenance costs. For them, a low-cost repair loan could come in handy.
This new financial infusion for DigniFi couldn’t come at a better time, said Counihan who notes, “We only fund needs, we don’t fund wants. We have a tremendous fan base, because we help them out of a pickle. We make sure all their needs are taken care of.”
