Buying or selling a vehicle is the second largest transaction most consumers will undertake – right after a home – but the process has many potential pitfalls when it comes to a private sale.
Is the money counterfeit? Do you always want to carry so much money with you? Was the bank check forged? Is the seller the legal owner of the car? Has the loan been repaid?
For this reason, many consumers go to a dealership to buy, sell, or trade in a car, paying more or being paid less than they would at a private sale, but avoiding these issues.
“These are the most common issues, and that puts a lot of people off the private market,” KeySavvy CEO Andrew Crowell told PYMNTS. “People give up, or they’re deterred from taking that risk, so they trade in their car at the dealership, they take a much lower price, and they actually sometimes leave thousands of dollars – depending on the price of the car – on the table.”
Level the playing field
KeySavvy aims to solve these problems with its peer-to-peer (P2P) payment app for private used car sales. For sellers, it verifies the identity of the buyer and secures payment. For buyers, the app verifies the seller and ensures that the buyer gets the title and can register the vehicle. For both, it automatically generates the required documents.
The company was created in January and the site went live in April. On June 16, KeySavvy and the Auto Repair Network Repair Pal announced a partnership in which car sellers and buyers can access RepairPal’s certified shops for pre-purchase vehicle inspections and ongoing automotive services.
“The technology is there and it’s improving, especially in the area of payments, to do a lot better and basically level the playing field,” Crowell said. “It is our mission. I want people to be able to make the best financial decision for them and not worry about the risk they may be taking.
Making the private market more efficient
KeySavvy is an authorized dealer, so with the seller’s consent, it can access data and extract records from the Department of Motor Vehicles that a consumer could not obtain. With this and other customer authentication tools, the platform can verify that the seller owns the car, that all lien holders have been paid, and that the buyer and seller are who they are. they claim to be.
“We are able to do that as a dealership, but unlike a traditional dealership, we don’t own the car,” Crowell said. “We are leveraging it to make the private market more efficient.”
The platform also facilitates payment through customers’ choice of credit card, wire transfer, or Automated Clearing House Transfer (ACH).
Each of the three payment methods has its own advantages and disadvantages in terms of convenience and cost, Crowell said. Credit cards are chargeable. Bank transfers often have lower fees and move money the same day during business hours, but add delay on weekends and holidays.
“ACH is generally the most common form of payment for us,” Crowell said. “It’s very fast and very convenient.”
Serving a market of 18.7 million vehicle sales per year
KeySavvy charges transaction fees for buyers and does not charge sellers. It tests different fee models.
Despite the potential pitfalls of buying and selling used cars, there were 18.7 million private sales in 2021, representing 48% of the used car market, Crowell said.
With the current shortage of new vehicles, the demand for used vehicles is high. Crowell said he listed cars for sale and many dealers reached out and wanted to buy them because they were sourcing cars to resell.
“There’s a huge number of transactions going on today,” Crowell said. “We are positioning KeySavvy as a transaction platform that can partner with all marketplaces and essentially solve the fraud and transaction issues they have.”