U.S. bank ready to ‘instantly’ fund auto loans for more car dealerships

The U.S. bank can pay more than 800 auto dealers instantly after finalizing a car loan, and the bank said Aug. 9 it was ready to expand such “real-time payments” to more retailers.

“I had to keep rewriting the version to change [the 800-dealer figure] because it just kept growing as I put it together,” spokesperson Todd Deutsch wrote in an Aug. 9 email to Automotive News.

He said that network includes both single-store dealerships and multi-location retailers.

US Bank said it completed a pilot version of the program in June.

“Dealer interest in this solution over the past few weeks has grown rapidly, with many particularly excited to finalize their transactions within moments of a consumer approving a loan, especially in the evening and even on Saturdays and Sundays,” said U.S. Bank Dealer Services. President John Hyatt said in a statement.

According to US Bank, traditional digital money transfers through the automated clearing house can take several days, especially if the dealer sells a car outside of bank hours. The ability to have loans instantly funded by the lender through the Automated Clearing House’s RTP network improves cash flow control and contract metrics in transit, the bank said.

US Bank spokeswoman Kristin Kelly said on Tuesday that her company can now issue these immediate payments to all dealers who work with US Bank on indirect loans and to banks with an RTP-eligible company.

“US Bank is focused on providing innovative real-time payment solutions to solve what our customers tell us are pain points in their payments,” Hyatt said in a statement. “We are simplifying loan payment processes to help our dealer customers better control their cash flow, giving them a competitive advantage and peace of mind.”

US Bank also this year introduced a variation of the real-time payment program to users of Lithia Motors’ Driveway digital retail platform. Customers who sell their vehicles to the National Dealer Group can now be paid in seconds instead of the traditional 24 to 48 hours for ACH digital transfers, US Bank said in March. The program isn’t exclusive, but it’s unclear whether retailers other than Lithia have worked with US Bank to add similar capability.

Lithia, of Medford, Oregon, ranks No. 2 on Automotive News‘ list of the top 150 US-based dealer groups, with retail sales of 260,738 new vehicles in 2021.

James V. Hayes