Once a consumer is locked into a car loan, it’s easy for them to habitually make the monthly payments without further consideration. But sometimes, it pays to hit pause and consider the potential benefits of refinancing an auto loan, for both lender and consumer. The key point is to evaluate and educate.
The Fed has already raised interest rates twice this year and is on schedule to raise rates two more times. This presents the opportunity to discuss refinancing with your customers. Make it a plan to educate customers on the value of refinancing after every Federal Reserve rate change.
Create communication calendars based on loan life-cycles. After 12 months, 24 months, and 36 months of continuous auto loan payments remind customers of the benefits of refinancing when in a better credit situation. Hard times can hit customers at any time, so plan on communicating the benefits of lowering auto loan payments through refinancing every couple of months.
Also, refinancing an auto loan gives the lender an opportunity to increase their non-interest-bearing income with consumer protection products. Providing complimentary consumer protection products, like a vehicle service contract or vehicle return, on an auto loan directly addresses consumer concerns about getting the best deal.
Never before have consumers held on to cars as long as they are now. After dealing with significant vehicle repairs, consumers are currently shopping for more than just APR. They are looking for the deal that provides the most for their money. With strategic F&I products paired with a loan, consumers will know that their investment is protected should an unforeseen mechanical breakdown or job loss occur.
When customers engage with a lender’s brand, they aren’t looking for another internet meme. They are looking for valuable information that could better their financial situation. Providing education on everything from the value of refinancing to how to protect their investment with consumer protection products is invaluable. This is the type of information and customer service that results in long-term customer relationships.
With more than 40 years of experience in innovating profitable solutions in the dealership space, EFG Companies knows how to differentiate lenders’ business and create sustained loan volume.