Correction: Blinker charges a fee to the buyer of $200. A previous version of this story incorrectly reported that a fee of $200 was charged to the seller.
After three years of test drives, Denver app maker Blinker will pack up its Cherry Creek office June 1 and zip northbound down Speer Boulevard for twice as much space downtown.
Co-founder Rod Buscher said he intends for the app to do for private used-car transactions (those handled outside a dealership) what Airbnb and Uber did for vacation stays and taxi rides, respectively. And he wants to double his headcount of 42 employees at a new, 11,000-square-foot office at 1675 Larimer St. in the next two years.
“There are 17 million cars sold privately every year, adding up to a $100 billion industry,” said Buscher, who helped launch the John Elway dealerships in the late 1980s.
Buscher said Blinker, which he co-founded with Tony Wilbert, has applied for 16 patents, and the technology is intended as a one-stop resource for buying and selling a used car outside a dealership. For sellers, the app will scan a license plate and pull relevant information such as year, make, model and an estimate of miles. For buyers, the app can suggest a fair market price. And the app can handle all the paperwork of a transaction in about 30 minutes, Buscher said, including title, service contracts and the transfer of money.
“Not everyone is comfortable meeting on Craigslist and carry a bundle of cash,” Buscher said.
The company gives away its resources to lure in users, and will earn its revenue by financing the purchase for the buyer like a bank, Buscher said, adding that he thinks the app will be most popular for transactions on cars selling between $10,000 and $25,000.
Buscher said Blinker reduces the process of financing a used car to 30 minutes with a few finger swipes. That’s because Blinker has underwriters on staff and can use recognition software on a driver’s license. That speeds up a process motorists enjoy about as much as sitting in bumper-to-bumper traffic.
“If you go to a dealership and agree on price, then you go to the manager and sit there while you go through all the options and they try to sell you products. The process takes an hour to two,” Buscher said.
“If you borrow from a bank, and if I’m buying a car from you, the bank wants to see a car. The seller needs to drive to a bank or to a credit union to review it and make sure it’s a good vehicle.”
Blinker will lend at rates between 5 percent and 18 percent for 60-month car loans, Buscher said, and right now will keep those loans on its books. Down the road, Buscher said, the company will bundle the loans and sell them as securities. The appetite is huge for buyers of loans, Buscher said, such as banks, private-equity firms and insurance companies.
“Car debt is 25 percent of consumer debt, excluding mortgages … People pay for cars before credit cards or mortgages because they need a car to get to work. So car loans perform very well,” Buscher said.
The company also makes money by charging a $200 fee to car buyers and sells warranties. And it may start selling car insurance.
This is not Buscher’s first time behind the wheel of an auto enterprise. He helped launch the John Elway dealerships in 1989, which eventually built up to seven dealerships and sold to AutoNation in 1998. Buscher then started a group in 2007 called Summit Automotive Partners. He sold his interest in 2011.
He said he thought about opening another brick-and-mortar car dealership but swerved instead at the chance to change the entire industry.
“This is a national platform, and if we get it right we can service millions of customers,” Buscher said. “We can change the way people buy and sell.”