Customer Preferences Blur Lines on Direct, Indirect Loans

SAN FRANCISCO — As the industry evolves, distinct direct and indirect loans will be replaced by a single auto finance product designed to improve the customer experience. That was the message from a panel of lenders at Auto Finance Innovation 2018 yesterday.

“Direct and indirect will merge into one channel,” said panelist Jennifer Heil, executive director of Clearlane, Ally Financial’s year-old online loan origination platform. To that end, Clearlane has expanded its menu of self-serve tools. The goal is to enable consumers to control as much of the financing process as they want.

Another panelist, CarFinance.com Senior Vice President and General Manager Samuel Lopez, pointed out that consumers don’t even know the difference between direct and indirect loans. Simply, “customers are expecting a better user experience,” he said, adding that customer empowerment will drive that experience.

Specifically, lenders should focus on “little details,” like thinking about the time of day customers are calling and communication methods they prefer, Lopez said. Also, CarFinance.com customers are paired with reps that stick with them through the entire loan process.

The ability to “self-direct” through the financing process is also a critical component of SpringboardAuto’s offerings, said Jim Landy, the company’s founder and chief executive. Consumers can move “sliders” on the site to see how loan rates would be influenced by down payment amount, for instance. Additionally, customers can receive quotes for trade-ins. The objective, in addition to transparency, is for customers to be in and out of the dealership in less than an hour, Landy said. That positive experience often sways customers to return to the dealership for service or to refer their friends to vehicles, he added.

SpringboardAuto continues to hone its customer experience efforts by tracking where consumers get stuck in the online loan process and then refining those steps, Landy said.

Broadly, a positive customer experience has another benefit for lenders: improved loan performance, panelists said.

“In my estimate, that’s probably a 10% lift in credit performance,” Landy said.