Car Capital Gets $150 Million in Support for Instant Auto Loan Approval Technology

A leading New York private equity firm extends a $150 million line of credit over the next three years to a Grapevine startup, making it easier for car dealerships to provide instant auto loans regardless of their credit history.

Car Capital on Tuesday announced the “flagship transaction” with subsidiaries of Fortress Investment Group. Fortress is also investing over $6 million in the company.

Equity and debt investments will allow Car Capital to finance more dealers and “underserved consumers” wishing to purchase vehicles, according to the company. Its dealer-exclusive electronic auto loan system allows dealers to instantly approve 100% of customers.

“We are very pleased to partner with Fortress, [which] has a long history of providing capital to fintech and automotive companies,” Car Capital co-founder and CEO Justin Tisler said in a statement.

Fortress Investment Group, founded in 1998, had over $54 billion in assets under management as of September 30, 2021. It works with 1,800 institutional clients and private investors worldwide.

Car Capital last year received a $20 million line of credit from Medalist Partners. It operates as a subsidiary of Car Capital Technologies, which has raised over $190 million in six funding rounds, according to Crunchbase tracking site.

Consumer Reports and True Car Estimate that 20-25% of all auto loans fall into the subprime category, with buyers with poor credit ratings often paying higher interest rates. That’s over 5 million car loans a year.

Even though car prices have skyrocketed during the pandemic, the average auto loan rejection rate has fallen 4.2 percentage points to 3.7% in 2021, according to the latest report from the Federal Reserve Bank of New York.

North Texas is a major auto loan market. Dallas-based subprime lender Santander Consumer USA, Plano-based Capital One and Fort Worth-based GM Financial are among the nation’s largest auto finance companies.

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