3 Reasons Auto Dealers Will Need A Lending Solution Update In 2022

VANCOUVER, BC / ACCESSWIRE / September 27, 2021 / Our world has been turned upside down in the past 18 months. As the pandemic swept the world, it has affected every industry in one way or another. With quarantines, closures and lockdowns, people were left out of work or worked dramatically reduced hours. This resulted in smaller paychecks. Unfortunately, the cost of living has not gone down with the global drop in income.

As financial hardship stems from sweeping business closures (some will never reopen) and the resulting unemployment, consumers are seeing their credit scores affected. It does not happen in isolated pockets, but is prevalent in North America and around the world. People have lower credit scores and this affects their ability to make major purchases like homes and cars.

In the automobile industry, auto loans have traditionally served these consumers with a top notch score which is around 680 or better. These are the buyers that dealers focus on and seek out because the loan is simple, straightforward, and with an approval rate of almost 100%. A first-rate consumer is an ideal customer for most dealers.

However, the changes brought about by the pandemic and the devastating impacts on livelihoods. Many consumers are not in the same financial situation as they were before the pandemic, and dealer lenders find it necessary to make essential adjustments to welcome this new customer. In response, solutions like Business intelligence are emerging to bridge the gap between dealers and these new customers to better meet their credit needs.

Emergence of a new client

The pandemic-era customer has a different profile than what dealer lenders are used to working with. There is a sharp increase in automotive customers which are non-prime, i.e. a score of 650, going to deep subprime which is a score in the three hundred or four hundred.

Rosa Hoffmann, CEO of DecisioningIT, shared some information regarding the post-pandemic auto buyer. “The unprivileged and subprime client is a client who may have gone bankrupt or may have had vehicles repossessed, there could be very many scenarios,” she said. “And these are always difficult to fund, but we can always help them. However, it is this niche that will start to emerge very soon. I think we’re going to see a significant increase in the number of non-privileged customers. Right now we are seeing car payments going, but defaults will start to increase. Yes, people are making their payments right now. But there is a lot of government funding available for individuals right now. When that ends things will get a lot tighter. And that’s when this new customer will emerge.

In order to better serve this new demographic, Hoffmann says dealers need to make some adjustments, the first being to have a lot of options on the table. There are lenders who can support these customers, probably more than the dealers realize. She also says it’s important for dealers to educate themselves about what non-senior loans really look like, both from a lending industry’s perspective and from a customer’s perspective. The car loan is going to change a lot over the next few years.

Non-privileged loans: a reminder

Working with the secondary customer is not a new experience for most dealers, but Hoffmann suggests that dealers need to rethink their approach when helping customers who don’t exactly fit the ‘perfect customer’ mold with perfect credit. . The truth is these customers are still buying vehicles, they are just looking for other ways like buy here, pay here when dealers might go the extra mile and keep them instead of sending them to other dealers who are ‘address more to this client. .

“Dealers know what non-senior loans look like,” Hoffmann said. “They all know what it is, they’ve all had clients who fit those criteria, but the need here is to re-educate them so they understand that a little extra work and effort can get the job done. approval of these people the first time. “

The pool of non-senior loan specialists is very small at the present time, and it is common knowledge that non-privileged loans are not easy. Working with these clients isn’t as easy as submitting their information, getting automatic approval, and sending it on their way. There are certain criteria that must be met – and different lenders often have different criteria they look for when making their decision to finance a car loan.

This can leave the dealership unsure of how to proceed and some customers may fall through the cracks.

AI Loan Matching Helps Consumers Get Approved

Lucy is a loan matching tool that leverages AI technology that acts as a customer credit management system, matching lenders with customers. With an 85% success rate, this means that dealers can successfully secure more pre-qualified customers for auto loans across a broader spectrum from premium to near-prime as well as sub-prime and even deep sub-prime.

Lucy software is designed to help fund more consumers, regardless of their financial situation. This translates into more sales of non-premium products, both new and used car dealers, by keeping them more competitive by giving them the means to help the client who may not correspond to the traditionally “ideal” profile. It expands the reach and reach of the dealership so that they are able to reach, attract and sell to more customers with diverse financial profiles. Lucy software offers vehicle matching, payment calls, CRM functionality and more. While the system is amazing at supporting unprivileged consumers, the value for primary consumers is also there. With good, better and better financing options available, Lucy takes care of all the details for all consumers, helping them get on the right track for a brighter and more stable financial future.

Keep customer service front and center

In the end, it all comes down to customer service. As we move into the post-pandemic world, it’s going to be different. This means that auto dealers are going to have to shed tradition and get rid of preconceived notions of the “perfect customer”. They will have to rethink customer profiles and readjust to this new normal.

“These customers are going to be in higher demand, and they should be treated like any other customer should be treated, the same service, nothing different,” Hoffmann said. “If their interest rate is a little higher than that of a primary customer, they shouldn’t be treated any differently. They always buy big and big purchases, and they should get the same type of service from dealers. “

It is important to reach these clients, to help them finance themselves – and that is why Lucy was created. Thanks to AI’s predictive loan matching capabilities, all clients are treated the same, with the same opportunities to obtain financing for their car purchase. And that gives dealers a broader platform to deliver exceptional customer service.

Hoffmann explained, “Dealers will see a huge flow of unsecured loans in the years to come and that means a lot more work and attention needs to be given to these customers, this will become a new normal just like selling at digital retail has made a huge presence. in our industry during the pandemic “We have seen more and more consumers wanting to start and end their purchase online, which is why the Lucy Widget and API was created, to support dealer websites and digital online retail tools’

To learn more about Lucy and how DecisioningIT helps auto dealers better serve their customers, visit https://www.decisioning.it/ today.

Media contact:

George Catan, editor
[email protected]

THE SOURCE: Business intelligence

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