Digital Auto Finance Trends & Opportunities for Lenders

According to PwC“91% of auto dealers believe a strong digital presence is critical to their overall sales strategy, yet 83% do not have a dedicated digital strategy.”  

There are a number of reasons for this. For starters, even as so many aspects of dealerships are becoming much more modern, especially with mobile and new digital offerings, the financing process still feels like it did 10-20 years ago. The same PwC research paper found that nearly 64% of dealers don’t offer customers the option to structure loans online, preferring instead to negotiate deals in person. 

Yet by not going digital, especially with pricing solutions and approaches, auto loan providers remain stuck using old, outdated processes. For example, many rely on disparate, siloed systems or legacy technology to manage and model data, run pricing simulations, attempt to create personalized offers, and deploy these offers in various channels.  

Not only is this type of approach time-consuming and error-prone, but it makes it extremely difficult for the financing company to deploy compelling offers in time to beat the competition. 

Creating Mutually Beneficial Outcomes

Yet going digital can solve these challenges and deliver real benefits for both parties. Customers can make the purchases that meet their needs and can walk away highly satisfied that they found the ideal vehicle at the best price and loan rate. Not only does this lead to higher revenues for the dealer, but they also improve internal efficiencies. In this example, “going digital” helps foster, maintain, and grow the relationship between the dealer and their customers. 

Consumers are increasingly willing to embrace digital solutions as a way to secure auto loans. A recent Forbes article reviewed the entire Deloitte 2021 Global Automotive Consumer study, and found that 74% of consumers would prefer to conduct credit checks and complete financing online instead of in person.  

While many dealers simply aren’t ready to deliver yet, they can meet these expectations with the right digital capabilities and overall approaches.  

For example, auto dealers should focus on the customer experience as well as their own efficiency improvements. They can do this by developing an entirely digital customer lifecycle—everything from advertising to purchasing to scheduling the first service appointment.  

Auto dealers would also be wise to consider additional channels such as mobile and social media in more innovative ways. The new generation of shoppers use Facebook and other social media to do research or evaluate others’ recommendations, so auto dealers may want to keep these demographics in mind and create very specific, personalized offers in the channels their prospects prefer. 

Fast Adopters Stand to Gain the Most

It’s a real challenge, but it’s also a real opportunity. Today, more than 85% of automobile purchases are financed, and in just the United States alone, there are more than $1 trillion in outstanding auto loans (TurnKey Lender). 

The good news is that the majority of dealerships and other auto loan financing companies find themselves in the same situation. They understand it’s time to change and know they need to begin to implement advanced end-to-end pricing tools, but many don’t know how to get started.  

Fortunately, new advances in digital and cloud technology have created valuable new innovations and trends in auto financing. For example, powerful end-to-end auto lending software like Earnix—using next-generation technologies such as advanced data analytics, machine learning, and artificial intelligence—now enable auto dealers to manage all aspects of their lending program.  

For example, pricing teams can now access and model large volumes of data, run detailed “what if” scenarios, and use machine learning and AI-driven insights to create and deploy highly personalized offers—all using a single, intuitive platform. 

The most effective solutions also help dealers meet stringent governance and compliance requirements, thanks to built-in reporting that provides a complete audit trail detailing every action. It also helps the dealers improve communications and even explain pricing using personalized offers and information.  

While there are many benefits to this new approach, one of the biggest is speed. Now dealers can develop and change pricing models in mere minutes, which means that they can often deliver highly compelling offers in real time. This goes a long way to providing a new experience to customers—and helping the dealer win the deal and grow market share.  

Take the First Step Today 

Now is the time for auto loan providers to take the first step in implementing a comprehensive digital strategy, and it may be easier than they think to  reap the many benefits of a modern pricing approach. 

With an end-to-end pricing platform auto finance providers can now use world-class analytics and advanced automation capabilities to develop and deploy much more compelling auto loans, faster than ever before. All of this gives them a valuable advantage in beating the competition, generating new sales, and creating long-term, profitable connections with customers and prospects.  

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