Back in 2005, consumers visited 4.1 dealerships before buying their cars. They were often uncertain about trade-in values, and simply followed leads from newspaper ads or radio spots. But the convenience and accessibility of the web have sent much of the vehicle-buying process online.
These days, the average car shopper visits only 1.1 dealerships, and 89% are fully prepared before they step foot on the lot. Most are looking for a guaranteed price based on online, mobile, or video leads.
Those considerations open the door for increased opportunity in the direct lending space, said Jim Landy, president and chief executive of CarFinance Capital LLC. Landy is steeped in industry experience, having developed RoadLoans.com, the direct lending unit of Triad Financial Corp., a company he founded more than two decades ago. Landy’s current venture, CarFinance Capital, also operates a direct-to-consumer division, called CarFinance.com.
Here are some of Landy’s tips for lenders considering a direct lending model:
- Consumers choose direct lending because they think it enables more control of the vehicle-buying experience. They demand a digital, no-hassle experience. Make sure the site conveys those concepts.
- A direct lending interface should be customer-centered ― cool, efficient, and intuitive process. It should include a secure, online credit application designed for quick completion and be optimized for mobile.
- Consumers should be able to easily submit supporting documentation, with the ability to email paystubs or driver’s licenses or to submit photos of those documents via text message.
- Loan terms and options should be adjustable. If the down payment amount increases $500, how much will the monthly payment drop? If the loan term falls to 60 months from 66, how will the interest rate change?
- The site should enable consumers to monitor, in real time, the status of pending and completed stips, and it should include simple online forms to capture free-form data.
