Though it’s only starting out in seven states, Solera Auto Finance has access to enough capital that it could be writing “captive-like” loans for dealership customers nationwide, the company said.

“The constraint is regulatory,” Alberto Cairo, Solera managing director of U.S. vehicle and fleet solutions, told Automotive News this month.

Solera Auto Finance will offer used-vehicle loans. It will begin buying retail installment sales contracts in Georgia, Indiana, Kentucky, North Carolina, Oklahoma, Virginia and Washington. It expects to be in about 20 states by the end of 2022, Cairo said.

Cairo said Solera would be doing the lending itself.

“That was important to us,” he said, describing it as a means of controlling the experience.

Solera Auto Finance will appear as the customer’s lender, but some retailers have asked if it could carry the dealership’s brand in a white-label relationship instead.

“Over time, we will see,” Cairo said.

Solera Auto Finance won’t compete in the new-car space, he said, and noted at one point how large used-vehicle brands had “driven a lot of volume” with “very slick front-end finance approval, vehicle choice work flows.”

The company will initially focus on shoppers bearing near-prime credit scores and conduct some subprime lending as well, Cairo said. However, the program will lend to customers of all credit scores, according to Solera spokeswoman Amy Casas.

Solera, which has artificial intelligence capabilities, expected the “vast majority” of loans would receive immediate decisions, according to Cairo. He said rates and underwriting criteria would be competitive.

Solera Auto Finance has three benefits for a dealership, according to Cairo:

1. Retailers can operate as though they own a captive finance company.

2. Funding times will drop by days and eventually to hours, improving cash flow.

3. A Solera Auto Finance rewards program will qualify users for a discounted dealership management system or even “DMS for free.” Cairo said “not that many” transactions through Solera Auto Finance would be necessary to achieve the free service.