DALLAS, Feb. 06, 2020 (GLOBE NEWSWIRE) -- Tricolor today announced a $30 million preferred equity investment from a global institutional investor to rapidly scale its mission-driven, technology-powered approach to the sale and financing of used vehicles.
In 2018, financially underserved customers in America spent $48 billion in fees and interest on subprime and Buy Here Pay Here (BHPH) auto loans, according to a recent report from the Financial Health Network. Tricolor is actively transforming the car buying experience and helping to eliminate unnecessary fees through a business model that aligns customer impact with business outcomes and leverages advanced technologies like artificial intelligence (AI) and machine learning.
To date, Tricolor has disbursed nearly $1 billion in affordable auto loans throughout California and Texas. With this infusion of funds, the company will rapidly scale its platform and retail network to expand availability for its guaranteed, high quality used vehicles and access to responsible auto financing options for Hispanic customers in new markets.
“The deck is stacked against financially underserved customers in America when it comes to purchasing and financing a used vehicle,” said Tricolor CEO Daniel Chu. “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.”
Tricolor’s proven and proprietary credit decisioning engine demonstrates its advanced analytical competency and serves as the foundation for a new direct lending model for subprime customers. Its AI-powered segmentation model assesses unique, nontraditional attributes for no credit and low-income consumers in order to assess intent and ability to repay. For more than a decade, Tricolor has successfully scored no file and thin file Hispanic customers, as evidenced by five well-received ABS securitizations.
This investment caps a number of recent key milestones that demonstrate both Tricolor’s impact and its ability to rapidly scale in service to consumers. In November of last year, it became the only lender among all auto asset-backed securities issuers to earn a Community Development Financial Institution (CDFI) certification from the U.S. Treasury Department.
Earlier in the year, Tricolor launched a new affiliate called Tricolor Insurance that leverages its proprietary underwriting algorithms and successful scoring strategies to provide affordable, low-monthly premium insurance policies to auto owners. The company will continue to expand this program alongside its growing dealer and financing network.
The company was also recognized with multiple awards for its growth, service, and use of technology, including the Auto Finance News Excellence Award for Technology and being named among the “Best Entrepreneurial Companies in America” by Entrepreneur Magazine for the second consecutive year.
Houlihan Lokey served as advisers to Tricolor on the transaction.
Tricolor is a Community Development Financial Institution (CDFI) and mission-driven company which sells and finances high quality, certified used motor vehicles through its premium brands, Tricolor Auto Group in Texas and Ganas Auto Group in California, utilizing advanced data analytics and technology to advance financial inclusion to a highly underserved market and offer responsible, affordable, credit-building auto loans to individuals with no or limited credit history.
Headquartered in Dallas, Tricolor and its affiliate Ganas Auto Group operate 36 retail dealerships across 12 markets in Texas and California, as well as a shared services center in Guadalajara, Mexico. On a combined basis, Tricolor and Ganas have served nearly 50,000 customers and disbursed nearly $1 billion in affordable auto loans by using its proprietary model to segment risk.
Cosmo PR for Tricolor