Alltel Corporation announced on March 26 an agreement with Ford Motor Credit Corporation to process all of its 8 million loans and leases in North America.

The agreement means Alltel's Little Rock, Ark., data center will handle virtually all car and truck loans and leases financed by Ford Motor Company, the world's No. 2 automaker.

Terms weren't disclosed, but analysts say it's a big step in the company's efforts to seize a larger piece of the $652 billion auto finance market, which is projected to grow to $800 billion by 2005.

Alltel and Ford Credit jointly developed the lease and lending system beginning in 1998. Success in building the system on time and on budget led Ford to hire Alltel to process its loans and leases, according to Jeff Fox, president of the company's information services unit.

Ford Credit, the world's largest automotive finance company with 10 million customers in 40 countries and about 12,000 dealers, is scheduled to complete converting its U.S. accounts to the new system by mid-2002.

Fox said Alltel will own rights to the lease and loan processing system, enabling it to market it to other auto finance companies and banks.

The consumer auto-lease market has grown to an estimated $160 billion since the mid-1990s. Leasing is a big business for the captive-finance companies, who increasingly have the field to themselves as banks and other lessors leave the market due to residual problems.

So far, banks haven't been successful leasing automobiles because they've had trouble mastering residual values and other nuances of the business. For that reason, the loan and lease system co-developed by Ford and being marketed by Alltel should be attractive to banks, according to analysts.

Ford and other automakers and banks are already using Alltel's software to process loans. The new Web-enabled system includes integrated lease processing capabilities and other enhancements, Fox said.

Analysts say it is the first time lending and lease processing functions have been combined on the same software platform. It is also the first time the lending arm of a large automaker has outsourced its loan and lease processing.

Fox said Alltel is pursuing other data processing agreements with auto lenders, but declined to give further details. "It's an area where we're very focused over the next 10 years on extending our reach globally," he said.