AI-Powered: Tricolor Reports $30M Investment for Affordable Car Loans

Tricolor uses an AI-powered model that takes into account nontraditional attributes for no-credit and low-income subprime auto loan customers.

Tricolor auto

Tricolor, a Dallas-based community development financial institution, announced that it has received $30 million in preferred equity funding from an unnamed global institutional investor.

Along with its affiliate Ganas Auto Group, Tricolor has disbursed nearly $1 billion in affordable auto loans and served nearly 50,000 customers across its 36 retail dealerships in 12 Texas and California markets. Tricolor said that the new funding will allow it to expand its auto loan service to customers in new markets.

Daniel Chu

“The deck is stacked against financially underserved customers in America when it comes to purchasing and financing a used vehicle,” Tricolor CEO Daniel Chu said in a statement. “We have proven that the right infrastructure and culture make it possible to build a profitable business providing these customers with affordable access to high quality vehicles. This investment will allow us to deliberately expand our business in pursuit of a mission to impact and improve even more lives.”  

In November, Tricolor became the only lender among auto asset-backed securities issuers to receive CDFI certification from the U.S. Treasury Department, and earlier last year, it launched Tricolor Insurance, an affiliate using proprietary technology to offer affordable premium insurance policies to car owners.

Founded in 2007, Tricolor uses an AI-powered segmentation model that takes into account nontraditional attributes for no-credit and low-income subprime customers. Tricolor said its proven and proprietary credit decisioning engine shows its advanced analytical competency and serves as the foundation for a new direct lending model for subprime customers.

Because of its success and unique approach to auto loans, the group has received the Auto Finance News Excellence Award for Technology, was named among the “Best Entrepreneurial Companies in America” by Entrepreneur Magazine for the second consecutive year, and has five ABS securitizations.

“This award is a gratifying validation of the mission of our company—that technology powers our ability to provide underserved customers with affordable access to high quality vehicles and ultimately improve their lives with a path to mainstream financing,” Chu said at the time of winning the technology award. “With AI-powered risk and analytics at the core of our business, we are dramatically remaking the used car buying experience in America for the Hispanic consumer.”

The group’s business model is based around eliminating unnecessary fees. According to a Financial Health Network report, in 2018 financially underserved U.S. customers spent $48 billion in fees and interest on subprime and Buy Here Pay Here (BHPH) car loans.

Get on the list.
Dallas Innovates, every day.

Sign up to keep your eye on what’s new and next in Dallas-Fort Worth, every day.

One quick signup, and you’re done.
View previous emails.

 

R E A D   N E X T

Comments are closed.