Octane Lending eases rekeying frustrations

Alternative to multiple hard credit pulls may be coming soon

When Jason Guss, Daniel Petkevich and Michael Fanfant set out to start Octane Lending, their goal was clear — connect dealers with more lenders and help F&I managers save time by not having to rekey customer information into multiple lenders’ applications. Though that portion of Octane’s software is getting positive reviews, the company is already evolving in an effort to help F&I departments even more.

Solving a problem

Before he become a co-founder of Octane Lending, Guss had worked in auto lending, brokerage and retail banking in Capital One’s Corporate Strategy Group. Along the way, he discovered that the indirect financing process in the powersports industry could be cumbersome. He then learned of Dealertrack, a company that helps auto dealers streamline retail financing, and he thought he could build a product that would do the same for powersports dealers.

Guss and his co-founding partners then created Octane Lending in October, using funding from Dreamit Ventures, a venture capital company. The first few months after Octane Lending’s founding were spent developing a product that would be easy for F&I managers to use, while also helping them to more quickly accomplish an everyday task — helping customers apply for retail financing. The company also began building a network of lenders to offer dealers more options.

Critical to Octane Lending’s system is its ability to allow an F&I manager to send applications to different lenders without typing the same information multiple times.

“What we offer dealers right now is a platform that allows dealers to avoid having to rekey information,” Guss said.

Information submitted to a loan application from Octane Lending’s website is encrypted via SSL, in the same manner as online purchases. The applicant’s personal information is preserved while an F&I manager has an Octane Lending window open, but it’s gone forever when the user logs off, so it’s never recorded anywhere.

“We don’t store any information, so nothing ever gets written to disk,” Guss explained.

Any dealer can try the Octane Lending system for free. So far most of the dealers participating are those near Octane’s hometown of Austin, Texas, but dealers in North Carolina, California and the Great Lakes region are also getting on board. As Octane creates partnerships with more lenders, dealer interest is growing, and though new lenders might not be available in some areas, the rekeying feature is universal.

New feature in the works

Octane Lending’s goal is to have about 250 dealers on board by the beginning of summer. Once that occurs, the group is hoping to have the support to launch another feature — pre-approved loans requiring only one hard credit pull. Though that component wasn’t initially in the works, Guss learned of its need after interviewing about 200 dealers.

“Initially we thought the biggest problem was the annoyance of having to rekey this information over and again, but what we found talking to dealers is they cared more about damaging their customers’ credit,” he said.

Unlike auto or mortgage loans, powersports loans don’t have a credit pull grace period, meaning that every loan application incurs a hard credit pull for the applicant. Hard inquiries lower a person’s credit score and remain on a credit report for two years. That means if one lender denies an application, and a dealer helps a customer apply for a second loan, the customer’s credit will be dinged twice.

Octane Lending is seeking to build a network of lenders that would offer pre-approved loans based on soft credit pulls, so that only one hard credit pull would be completed following the acceptance of the pre-approved loan.

“You can send off one application to multiple banks, and it only incurs one hard credit pull,” Guss said.

This pre-approval process would benefit both the consumer and the dealer. The consumer would avoid multiple hard credit pulls, while also being able to choose among the pre-approvals for ideal rates and terms. Dealers would be able to offer customers the piece of mind that comes with only one hard credit inquiry, and they’d likely be able to finance more customers as banks would compete head to head for a customer’s loan.

“If you’re a borderline customer, there’s a chance that one bank would approve you, when another wouldn’t,” Guss said.

Octane Lending expects more than 70 percent of pre-approved loans will be awarded to consumers following the hard credit pull.

“Every dealer that we’ve spoken with loves the idea of being able to send out to multiple lenders with one hard credit pull,” Guss said.

In order to launch the new feature, Guss believes Octane Lending needs participation by at least a few hundred dealers, so it can prove its strength and dealer acceptance to lenders. That’s driving Octane Lending in its efforts to increase dealer use, so it can grow the company and help dealers in the process.