Market Trends Impacting Auto Originations and Loan Servicing

While the automotive wholesale/retail industry continues its digital transformation, two recent Cox Automotive vodcasts cover key trends across the buying/selling/ownership landscape and their impacts to lenders. Condensing for the purpose of this article, strategic discussions with thought leaders Andy Mayers, AVP Lender Strategy and F&I Operations, and Kait Gavin, Vice President Titling Solutions, focused on three pertinent facts and takeaways:

• People love and want to own vehicles despite affordability issues,
• Consumers are looking for better and more fluid buying experiences, and
• Forward-thinking dealers, lenders, OEMs, DMVs and others are adopting solutions to gain efficiency at record pace.

Takeaway 1: Vehicle ownership prevails, but paths to purchase vary greatly.

Where buyers once followed a “direct” or “indirect” path to finance their vehicle, today their “omnichannel” approaches typically begin online: at a dealer, lender or OEM website, or a third-party site such as Autotrader or Kelley Blue Book. Once entered, they will take various paths to complete their purchase — with most finishing at the dealership.

This fluidity sees lenders adjusting their engagement strategy and business models, because no matter how the scales tip between online and in-store activities — or where consumers start and end their buying journey — financing remains the foundation of a healthy auto retail ecosystem.

Which leads to…

Takeaway 2: Providing the “right” financing experience is good for business.

With affordability still an issue, it’s no surprise that many car buyers begin their journey searching for an acceptable vehicle and monthly payment combination. They are primarily using dealer and lender websites to “crunch the numbers” — with lender websites #1 for key financing steps like prequalifying for a loan and applying for credit.

To maximize originations opportunity savvy lenders are getting ahead of the trend by leveraging technology to engage shoppers at the “right” time and place(s) with financing, as well as facilitate their deal-making, finalization and contracting steps with the dealer.

Once the deal is bought and funded, there’s plenty left for lenders to do, which brings us to…

Takeaway 3: Optimizing back-end operations has far-reaching benefits.

To truly maximize auto lending success, improving loan service is equally important. This side of the business has seen more states adopting electronic lien & title processing, and a multitude of vehicle owner events — cross-state purchases, trade-ins, legal name changes, even total loss insurance claims — keeps this team challenged and busy.

The good news here is that the same technology for speeding title perfection, management and release not only improves compliance and lenders’ bottom lines, it also drives better buying experiences for consumers as well as faster and more profitable wholesale/retail transactions. Go deeper into these trends & strategies for: 

• Originations: coxautoinc.com/lenderinsights
• Loan Servicing: coxautoinc.com/loanservicetrends

Cox Automotive is a proud sponsor of Auto Finance Summit — visit us at booth 113.