Today’s customer expects same-day service from every business they interact with — and the auto finance industry is no exception.
There are several steps auto lenders can take to offer a fast and painless digital experience to keep up with the expectations of their changing customer base.
Step 1: Offer a seamless, fast loan application
Car loan applications are not known for their simplicity. Most lenders have moved this process online, but they still ask customers to fill out lengthy, multipage forms. This experience should be enhanced by capturing only minimal information up front to make a credit decision. To make this step even faster, give borrowers the option to automatically fill in the forms using open banking technology.
Step 2: Let the borrower build their ideal loan
Customers like the flexibility of tailoring a deal to match their needs. If they have a monthly budget in mind, it’s very convenient to view the changes as they experiment with different cars and back-end products. Some borrowers are more concerned with the up-front, or cash down, cost, or may simply want to pay off the loan as quickly as possible. A modern user experience should allow customers to explore these options digitally, away from the pressure of doing it in person at the dealership.
Step 3: Use digital contracts and signatures
E-signatures have been around for years, but the pandemic has accelerated their adoption. Complexity and cost are common challenges often cited as a barrier to adoption. This may have been true in the past, but it is no longer the case. There are several options at a wide range of price points, offering a variety of services to support the transition.
Step 4: Digitize and streamline verifications
For an auto loan, lenders typically conduct several verifications for the borrower. Depending on the credit segment and line of business, they may verify the borrower’s identity, residence, income and employment. From the borrower’s perspective, making copies or taking pictures of multiple documents is a painful process.
Digitizing verifications is one of the greatest untapped sources of efficiency and customer service for an auto loan. Lenders can choose from numerous providers to automate the verification of: identity, with LexisNexis, Onfido or Lightico; residence, with Neustar; and income, with The Work Number or Plaid.
If a lender still must request documents from the borrower, allowing them to directly upload it to a portal (with a convenient text) is preferable to traditional methods. Once a document is in-house, utilizing machine learning to verify it is more efficient than having an employee do it manually.
Step 5: Offer convenient vehicle pick-up options
The pickup step of the car-buying process has changed drastically during the pandemic. Many buyers are opting for a painless curbside pickup option like the one offered by CarMax. Deliveries are more common now, with increased adoption driven by direct-to-consumer retailers like Carvana, Vroom and Shift.
In person, contact-free delivery options should not be seen as either-or propositions; providing buyers with all these options is the best way forward.
Step 6: Flexibility
According to Cox Automotive, consumers are making it clear that digital retail is here to stay; 64% of shoppers want to do more of the purchase process online the next time they buy a vehicle. However, amid the excitement for digitization, most buyers today are not completing their online purchases.
Customers expect the ability to complete their purchase online, but also want the flexibility to take it offline at any point during the process. OEMs such as Toyota offer this flexibility with the SmartPath digital suite.
While consumers like the idea of buying a car completely online, the industry is not fully equipped for this. The same-day digital car-buying process is the new standard for our industry. By offering digital options at each step of the car-buying journey, we can get buyers into a car in a matter of hours. It’s time to rethink the online application process to enhance the lender-to-consumer journey.
Shim Mannan is the executive vice president of product and business development in the Americas for White Clarke Group.