Did you make New Year’s resolutions yet?
Here’s our input, AFN’s list of four spot-on resolutions that auto finance executives should take note of in 2016.
1. Keep Up with Interest Rates
The Federal Reserve’s 0.25% rate hike in December will not immediately affect the auto finance industry, analysts say. That said, lenders should expect more rate hikes throughout 2016 and plan accordingly, Sarah House, economist at Wells Fargo Securities told Auto Finance News. Many lenders, including Wells Fargo, raised their prime rates immediately after the Fed’s announcement. The industry should expect three more hikes throughout the year, probably 25 basis points each, ending in the 1% to 1.25% range, according to House.
2. Step Up Your Tech Game
An up-to-date website, with excellent mobile access, is a necessity not an option, we learned in 2015.
New startup companies emerged in the auto finance industry over the past year, and existing banks prioritized speed of funding and decisioning by beefing up online origination platforms (see our roundup of Top 10 tech headlines of 2015). Increased regulatory scrutiny, thin margins and availability of new technology demand that tech must be up to date.
3. Look Into Paperless
Going paperless, or e-contracting, was a huge and continuing trend in 2015.
Ally Financial Inc. has recently partnered with RouteOne to offer full e-contracting to its consumers, while DriveTime announced it will go a step further in 2016, and introduce a paperless loan modification system. In October, Westlake Financial Services also announced it would offer e-contracting to its dealer base nationwide through RouteOne. Faster funding for dealers, as well as speedy and mobile decisioning are the top reasons that lenders cite for adopting e-contracting.
For an easy “how-to” on going paperless, listen to our webinar with CarFinance.com.
4. Give Alternative Data a Chance
With millennials now comprising more than one-third of the driving population, according to LendingTree data, lenders look for ways to attract these tech-savvy drivers. The obstacle? Many millenials do not own a credit card, and are considered underbanked. However, an underbanked consumer is not necessarily a subprime consumer, according to FactorTrust Chief Executive Greg Rable, and to fund those consumers, lenders dive into alternative data — date outside of what’s routinely provided by the three major credit bureaus.
Via video, watch Greg Rable explain the difference between underbanked and subprime.Like This Post