For a bank wanting to establish a lending relationship with local auto dealers, the capabilities of a modern lending solution are crucial in initiating and sustaining a mutually beneficial relationship. That solution must be able to tailor the lending programs to the dealer’s market focus, make it easy for dealers to offer financing, and quickly return a decision to help boost vehicle sales. Here’s how these solutions are addressing those requirements and making indirect auto lending for banks easier.
Give Dealers Immediate Access to Programs Tailored to Their Markets
With a modern lending platform, dealers can easily access your current finance rates via desktop or mobile device. An intuitive interface allows dealers to select from a range of programs and rates tailored to their market focus. They can restructure and reprice deals as part of the negotiation process to better suit a borrower’s financial position.
If the borrower already has an account with you, dealers can also access certain account information such as payoff amounts for current loans or documents. With this information, dealers gain a better understanding of the borrower’s financial situation that may be useful in vehicle negotiations.
Make It Easy to Submit a Loan Application
The efficiency of indirect auto lending for a bank is enhanced with tight integration between the dealer interface and the loan submission process. Information regarding the vehicle make, model, and price is automatically included in the loan submission application.
Any required identification or documentation such as driver’s license, proof of residence, or pay stubs can be easily captured by the mobile loan submission application.
A bank that enables an entirely digital loan submission paves the way for rapid review and loan approval that significantly increases the probability of a sale.
Decision Speed Differentiates Lenders and Builds Dealer Loyalty
Decision speed is one of the biggest factors in closing a deal and the majority of car buyers remain critical of the time it takes to purchase a car at a dealership. The Cox Automotive Reimagining the Automotive Consumer Experience Survey found that “consumers are most interested in changes that will reduce unwanted friction in the vehicle buying and service experience” and “83% of consumers want to complete at least one step of the purchase process online.”
The key to reducing time spent at the dealership is the speed of lending decisions. For rapid indirect auto lending, banks can take advantage of extensive automation and access to a wide range of information services that significantly reduce, and often eliminate, the need for underwriter intervention in the loan decision process. Decision speed is accelerated by:
- Verification services that automatically confirm or question an applicant’s identity, income, and/or employment. These services reduce the risk for both dealers and banks.
- Auto-structuring that iteratively modifies terms until a match is made with credit policies. When applicants initially fail to meet a credit policy, auto-structuring can find options that increase the borrower’s ability to obtain credit.
- E-contracts that allow banks to respond electronically with all the relevant information packaged for quick review.
- E-signatures to confirm receipt and acceptance of the loan terms.
A bank with the ability to rapidly respond to dealer requests for financing plays a critical role in enhancing the car-buying experience. For the dealer, you’re offering a simplified lending process by providing vehicle-specific terms and rapid loan decisioning. For the borrower, you’re providing a completely digital lending experience that reduces the time spent at the dealer. With these capabilities, you establish a reputation that helps a dealer move vehicles while you build dealer loyalty.
Indirect Auto Lending: Banks Gain Advantage With the Right Software
With the right software, indirect auto lending can be a growth opportunity for regional and community banks. Process convenience and decision speed are the critical attributes that make a difference to auto dealers looking for lending partners. Software that gives auto dealers the ability to immediately access financing programs and rates tailored to the markets they serve facilitates a completely digital loan submission and rapidly returns a lending decision, allowing a bank to become an essential partner in the goal of increasing vehicle sales.
defi SOLUTIONS’ online defi CONNECT DEALER and defi CONNECT ORIGINATIONS products simplify indirect auto lending for banks and dealers. defi CONNECT products integrate with defi’s flexible, scalable, end-to-end lending platform that includes loan and lease originations and servicing systems. If you’re looking to expand your indirect lending opportunities with local dealerships, contact our team today or register for a demo.