Why Your Electric Vehicle Lending Architecture Matters in the Current Market

Electric vehicle lending and digital lending technology have evolved, converging to create better consumer experiences. Data gathering by both technologies makes electric vehicles and digital technology partner particularly well. Digital lending platforms facilitate automated processes, gathering data that make end-to-end loan servicing possible, and, as such, they are quickly becoming a vital element of the future of consumer lending.

Meanwhile, many lenders are positioning themselves for entry into the nascent lending market for borrowers wanting to purchase an electric vehicle. Lending architecture that allows consumers to utilize a primary digital platform for most aspects of an auto loan and APIs to pull data from core systems, client systems, and customer-facing portals will result in a better experience. Lenders incorporating digitized end-to-end lending will benefit, enabling them to protect and grow their revenue streams, significantly decreasing costs and enhancing lenders’ risk management capabilities. Lending architecture is evolving in tandem with electric vehicles to make buying this eco-friendly transportation easier.

For consumers who require services that support electric vehicle lending, architecture that provides a positive digital experience greatly simplifies the borrowing process. These digital platforms are at the leading edge of this sector within the consumer lending industry. While traditional lending platforms require human involvement at every stage of the loan process, these digital lending platforms for electric vehicles decrease the processing time and eliminate human error.

According to a report by Mordor Intelligence, the global digital lending market surpassed $450 billion in 2024 and is predicted to have a compound annual growth rate (CAGR) of nearly 12 percent between 2024-2029. This would result in the digital lending platform market reaching $795 billion by 2029. Those lenders who adopt a singular digital platform will have an advantage over their competitors, as they will be able to comply with regulations more quickly, make faster decisions, and enhance the overall efficiency of their operations.

Electric vehicles are quickly becoming more prevalent on the roads, and the proportion of those bought with financing is also growing rapidly. According to Experian’s State of the Automotive Finance Market for the fourth quarter of 2023, electric vehicles (EVs) are gaining more consumer traction in the new vehicle market.

“While EV prices are still relatively high, new incentive and rebate programs, combined with more affordable options hitting the market, have resulted in a broader range of consumers choosing EVs,” said Melinda Zabritski, Experian’s head of automotive financial insights. “As newer models roll out and the infrastructure continues to develop, it’ll be interesting to see how the EV market changes in the near and long term.”

Another factor that companies must consider is that consumers are more likely to purchase electric vehicles outright rather than lease them. Around half of consumers are choosing to finance an electric vehicle purchase, while 30 percent are opting for leasing, according to Experian.

Saving time is why auto lenders are turning to a single end-to-end lending platform. They’re designed to speed loan applications by enabling easier sharing of relevant documents while helping lenders evaluate a potential customer in seconds or minutes rather than days or weeks. The architecture of these digital lending platforms allows lenders to quickly evaluate a borrower by calculating creditworthiness to reduce risk.

By quickly evaluating a borrower’s details, the platform also enables lenders to develop the most appropriate loan terms, personalizing loans to meet each consumer’s needs. It also provides lenders with the capabilities to better identify fraud attempts within the system. Automating these functions accelerates the process of loan approvals and servicing and saves considerably on cost. 

This layering of technology by lenders helps them communicate with consumers to create solutions that best suit individual borrowers. Innovative new technologies gather data on each applicant, allowing them to collaborate to create an experience geared towards their specific needs. Having a single platform on which this takes place enhances communications between lenders and their customers, along with improving workflows and smoothing processes for lenders’ employees.

With loans for an electric vehicle, lending architecture needs to take into account more than traditional auto financing does for conventional vehicles. Purchasers of electric vehicles shouldn’t have to choose between what’s fiscally sensible and what’s sustainable.

Auto lenders must be innovative in their financial offerings to promote the sustainable lending options many electric vehicle buyers will want. This gives potential borrowers a digital platform that considers a consumer’s personal sustainability goals when applying for a loan. It will also encourage those considering an electric vehicle to enter the growing electric vehicle market, which is estimated to achieve an estimated value of $906.7 billion by 2028.

New digital platforms for auto lenders will help increase the adoption of electric vehicles, as financing in the early 20th century allowed consumers to purchase conventional motor vehicles. But along with this drive for sustainability comes the real advantages inherent in owning an electric vehicle. Lending architecture needs to take into account the much lower energy consumption and minimal maintenance costs of these vehicles, with these savings factored into any lending terms. For borrowers wanting to finance an electric vehicle, this new digital lending architecture offers several advantages for consumers.

Borrower benefits this technology makes possible include:

• Enabling loan decisions to be made in near real-time.
• Keeping monthly payments to a minimum.
• Managing payment settings from anywhere.
• Optimizing the electric vehicle’s efficiency by tracking battery health and mileage.
• Presenting unique financing options geared explicitly to electric vehicles.

With the combined data gathered by digital lending platforms and electric vehicles, consumers can calculate their carbon footprint and how their purchase makes a sustainable difference.

Lenders will possibly use data gathered from the new vehicle itself, but they will also have access to information from the digital software applications used to support electric vehicle lending. Architecture that considers this data will assist lenders in making their systems friendlier to their customers while also improving scalability. The consumer financing sector is currently engaging with third-party contractors for managed servicing and other lending services. 

Such fintech makes processing and servicing auto loans easier for lenders and borrowers. Cloud-based architecture already helps support many of these end-to-end lending solutions, streamlining business processes and promoting efficiency. Such digital platforms will become requisites in the consumer lending industry, enabling lenders to customize for specific requirements based on things like compliance needs, currencies (including cryptocurrencies), geographical location, and language. Not only will this improve efficiency and customer satisfaction, but this digital architecture will also assist lenders in managing risk.

These new technologies have additionally allowed new players to enter the market, with captive lenders having an advantage over other consumer lenders due to their integration with electric vehicle producers. Fintech providers are helping all lenders harness the power of data; however, this advantage will likely be short-lived. Lenders wanting to enter the electric vehicle market are already adopting innovative business models that will allow them to utilize new data-based revenue streams and even monetize the data to offer more customer-focused services.

Technology is critical in electric vehicle finance, and none more so than that which allows lenders to employ data sensibly. For this reason, many lenders partner with fintech companies that can provide them with a means of analyzing data gathered during the loan application process while purchasing an electric vehicle. Lending architecture in the future will rely mainly on these data analytics, which can show lenders which customers will benefit most from and be most likely to take up offers for specific services like auto insurance, automatic payment systems, digital wallets, life insurance, and add-on loans that allow consumers buying an electric vehicle to enhance their new purchase.