F&I provider Ally is branching out with vehicle-service contracts and gap coverage on TRED, an online peer-to-peer used-car marketplace.

“This is one of the first relationships where Ally’s insurance products will be offered direct to consumers,” says Ally spokeswoman Sari Jensen.

The offering of VSC and gap coverage extends Ally’s relationship with TRED, which started with vehicle-financing services in April. That first step was crucial to 5-year-old TRED, says founder and CEO Grant Feek, 36, a Harvard MBA graduate.  

“We started out only able to do cash deals in our transactions,” he tells WardsAuto. “We were able to get a dealer license, which helped us take loans for buyers. We knew we needed an integrated F&I solution. For us, it’s a second leg to stand on.”

Ally’s relationship with the start-up firm “expands our digital presence and brings trusted financing and insurance products to its customers at the point of purchase,” says Ally Insurance President Doug Timmerman.

TRED connects buyers and sellers and, in addition to the F&I services, oversees a 150-point inspection on vehicles and offers a vehicle history “so customers are getting what they think they are getting,” Timmerman says.

Feek says, “We offer all the advantages of a more-traditional dealership. We effectively are a dealership, with licenses in Washington state, Oregon and California.”

The plan ultimately is to go national, he says. “The model is geared towards rapid expansion.”

“It’s totally different than buying or selling a car on, say, Craig’s List,” Timmerman says.

Ally has similar partnerships with other online automotive buy-sell companies and plans more, “but we just haven’t coordinated on the announcements yet,” he adds. “It’s a business space we like. You see more untraditional companies entering the marketplace. This is another venue for us to do business.”     

In addition to its website, TRED has a mobile app. Customers “definitely skew towards Millennials, Feek says.

There are challenges in selling F&I online, but Timmerman contends they’re surmountable.

“It goes back to a presentation on a menu that includes full disclosure and making sure customers understand what they are getting, as well as knowing the features and benefits of the products,” he says.  

“It’s a process we teach and encourage dealership F&I people to use to achieve optimal results. It’s just online.”

If an F&I manager uses the menu correctly, the process walks the customer through the decision-making, he says. “Online, they point and click through.”

The quality of today’s used cars makes it possible to offer extended warranties on them, something that was considered too risky a couple of decades ago.

“No doubt the performance and quality of used cars has changed dramatically,” Timmerman says. “As a result, we’ll now go out as far as 175,000 miles (280 km) on our service contracts.”

sfinlay@wardsauto.com