The online fintech startup SoFi, which is currently through the merger with the special purpose vehicle (SPAC) Social Capital Hedosophia Holdings Corp. V (NYSE: IPOE) goes public, has aggressively launched new financial products and services in recent years and is building a comprehensive portfolio for its clients.
However, there is one category of credit that has not yet taken a lot of steps: car loans.
This could change soon.
Why a partnership with MotoRefi could position SoFi for a massive market opportunity
SoFi is preparing loudly to announce a new partnership with MotoRefi Bloomberg. MotoRefi is a car loan refinancing startup that seeks to streamline the entire experience, from finding the best interest rates to simplifying the documentation process. The startup raised $ 4.7 million in seed capital in 2019, followed by another Series A funding of $ 8.6 million in 2020.
Currently, SoFi auto loan refinancing offers only include referrals through a network of third party lenders via Lantern, which SoFi acquired in 2019. SoFi manager Jennifer Nuckles said Bloomberg that car loans are a “consistent request” from SoFi members when asked what additional products they would like.
The company also pointed to internal data showing that many members have auto loans and could benefit from refinancing at lower interest rates, making the category an obvious choice to help customers.
The next blockbuster IPO?
2021 could be one of the greatest years for an IPO in stock market history. However, since only a small fraction of IPOs make almost all of their profits historically, who will you trust to uncover the most? innovative and High upside IPOs in the coming months?
There is one company that “named” these companies long before they made it big. They first recommended Netflix on in 2004 $ 1.85 per share, Amazon in 2002 at $ 15.31 per share and Apple back in the iPod shuffle era $ 4.97 per share. Look where you are now.
This company: The Motley Fool.
Anyone willing to make investing a part of their financial freedom strategy should check out The Motley Fool’s flagship investment service. Stock advisor. They just announced their Top 10 “Best Buys Now” around the world entire exchange. Whether you’re starting with $ 100, $ 500, or more, be sure to check out the full details.
Click here to learn more
Overall, the indebtedness of car loans has risen steadily for years, which is partly due to rising new car prices. According to Edmunds, the average new car price in the US exceeded $ 40,000 for the first time in 2020.
Total auto loans outstanding in the US hit a record $ 1.37 trillion in the third quarter, according to the Federal Reserve. These numbers underscore the market opportunity SoFi is pursuing through the partnership.
MotoRefi reportedly refinanced approximately $ 250 million in debt in 2020. SoFi and MotoRefi argue that many consumers do not know they can refinance auto loans, while borrowers often know about mortgage refinancing. Companies see an opportunity in informing members that they can do just that – and save money in the process.
SoFi growth strategy: expansion to new products
SoFi announced the merger with SPAC back in January, and the company made it clear that a large part of its growth strategy in the coming years will be based on expanding its product portfolio and cross-selling members for additional services.
Using multiple products results in better unit economics in the form of lower member acquisition costs and higher variable profit per member. There are currently approximately 400,000 members with multiple products and SoFi is aiming for 775,000 by the end of the year.
Last month SoFi launched its first credit card offering 2% cashback and structuring the rewards program to pay off debts. At the same time, plans are outlined to enable private investors to participate directly in initial public offerings, a process that in the past has favored large institutional investors.
Disclaimer: Motley Fool Ventures has invested in MotoRefi.