Change is afoot. Maybe it’s the shifting finance patterns of the Millennial generation that’s causing the fuss, or simple adjustments to consumer buying habits. Regardless, the fact is this: Changes in the way people buy cars and get them financed are impacting both dealers and lenders. These consumer-driven demands for faster, more efficient and personal transactions are causing deep waves of change throughout the entire industry.
Here are three key trends lenders should keep an eye on:
- Efficiency – The Online Lending Potential
Online lending that is faster, more efficient, with less paperwork has become a critical part of the overall experience buyers are demanding. According to the 2017 Cox Automotive Car Buyer Journey Study, 65% of buyers are frustrated with the time it takes to handle paperwork and 52% of buyers want to do the credit application on-line. They want a faster, more efficient approach to the finance part of the deal. Indeed, in part it’s this consumer shift that’s driving technology adoption. Whether it’s Cox Automotive promoting a connected solution, the emergence of FinTech companies, or financial institutions wanting to provide pre-approvals, the lending landscape is changing. Lending partners must be thinking about how to service this growing segment of the marketplace.
- Personal Service: Providing Dealers Complex Decisioning for Car Buyers
With the increased complexity of scorecards and decision processing, comes a growing desire for lending partners to provide more information to dealers to help them consider alternatives and more selectively structure profitable deals. What if the customer puts another $1000 down? How or does that impact the buyer’s decision? And can a better deal be reached? In response to the need to create a customized decision for every deal, tools are being developed that enable dealers to automatically rehash deals by trying multiple deal structures based on the original approval. These tools can give dealers more flexibility when it comes to building custom and more profitable deals within the lender’s policy, deals that are structured to better suit the customers lending profile. In fact, Dealertrack is partnering with defi SOLUTIONS to create powerful rehash opportunities that allow lenders to be more efficient and personal while reworking deals that satisfy the dealers and their buyers.
- Speed – The Emergence of Digital Contracting
Lenders are no longer asking IF they should do digital contracting. They’ve heard from their dealers and are now asking when and how it can be implemented. Dealertrack currently features more than 20 key lenders and captives across the US, and that number is growing as lenders see the value of expediting transactions more efficiently. The number of contracts processed monthly by Dealertrack dealers has grown at a healthy rate. That’s not a surprise, considering that digital contracting can drastically reduce the average days to fund for contracts. Speed, efficiency, and paperless contract processing are now norms for indirect auto.
The Power and Promise of Technology
For all their power and promise, new technology innovations mean little without partnerships and people to help drive your business forward. That’s why Dealertrack and defi have come together. By partnering, we can ensure that lenders have the tools and solutions needed to deliver the best possible service to dealers while realizing the many benefits derived from more efficient operations. Together we are working on integration and offerings that allow you to choose when and what you want to do across virtually the entire lending spectrum.
It’s true that change is here. But whether that means online lending, rehash, digital contracting or the next “big thing” around the corner, the one constant should be this: Lenders must provide good service and quality products to dealers and their customers. Through innovation, service, and dedication, the commitment and partnership between Dealertrack and defi strengthens the relationship between dealer and lender, which in the end creates a better buying experience for consumers.
Andy Mayers is the lending solutions strategist for Cox Automotive. In his current role, Andy leads Enterprise product strategy for lending partners across Cox Automotive. He works with various Cox business units to identify product opportunities that will deliver more value to lending partners and provide the lenders’ perspective to new innovations delivered to Cox. During his 14+ year tenure at Dealertrack, now Cox, Andy has product managed eContracting, developed Dealertrack’s overall integration strategy, run the business analysts and UI teams and overall product management at Dealertrack. Andy has over 20 years of experience in providing software to dealers and financial institutions.