- Tricolor recently announced it raised a $30 million preferred equity investment from a global institutional investor
Tricolor recently announced it raised a $30 million preferred equity investment from a global institutional investor to rapidly scale its mission-driven and technology-powered approach to the sale and financing of used vehicles.
A couple of years ago, 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 report by the Financial Health Network. And 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 utilizes advanced technologies like artificial intelligence (AI) and machine learning.
So far, Tricolor has disbursed nearly $1 billion in affordable auto loans throughout California and Texas. And 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,” explained 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 is known for demonstrating its advanced analytical competency and serving as the foundation for a new direct lending model for subprime customers. Plus its AI-powered segmentation model assesses unique and nontraditional attributes for no credit and low-income consumers in order to assess intent and ability to repay. For over a decade, Tricolor has successfully scored no file and thin file Hispanic customers, as evidenced by five well-received ABS securitizations.
This funding caps a number of recent key milestones that demonstrate both Tricolor’s impact and its ability to rapidly scale in service to consumers. And 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.
This year, Tricolor also launched a new affiliate called Tricolor Insurance, which utilizes its proprietary underwriting algorithms and successful scoring strategies to provide affordable and low-monthly premium insurance policies to auto owners. And the company will continue to expand this program alongside its growing dealer and financing network.
