5 Ways Lenders Should Prepare for Transition Into 2019
It’s the beginning of October and auto dealers are doing the old car/new car shuffle. Current models are moved out of the indoor spotlight and pushed to the part of the lot where they are “priced to sell.”
Showy 2019 models are off-loaded from haulers and placed under those coveted spotlights. 2018 inventory exposure is calculated, and the cost of 2019 vehicles is factored. Over in the F&I office, the team is putting together packages to make those 2018 models attractive to consumers who are looking to make a deal. So what role does the auto lender play in this transition period?
Have a “Sale” Mindset
Match your auto dealership clients and go into the fourth quarter with a “sale” mindset.
Support value-minded consumers – Some consumers who are taking advantage of fourth-quarter sales on 2018 models are in a value mindset. Whether it’s a matter of limited funds, the need for a replacement vehicle, or simply how they roll, these consumers are pinching pennies and looking for the best deal possible. Capture these loans by offering attractive interest rates, manageable loan term length, or rewards for good credit. Include valuable consumer protection packages that pay dividends immediately.
Speed the process – Just as dealerships are looking to move their inventory, lenders should consider steps to speed the process of locking in a loan. Revisit the website and online pre-approval forms. Competition is strong for digital loan originations. The lender that puts its best foot forward has a better chance of securing the business.
Stay the course – In 2017, banks lost auto loan market share for the fourth straight year, as they backed off from the sector. Ensure consumers know your financial institution welcomes auto loan business. Hang up a banner, run an ad, include promotional rates in all marketing efforts. Actively seek out new business and remind existing customers that favorable credit terms are available.
Reward good behavior – According to Experian, credit scores have improved steadily during the year. When pulling credit histories on a potential loan, review credit score improvements and consider offering more favorable loan terms. These consumers have demonstrated improved creditworthiness. By rewarding good behavior, a lender can gain a customer for life with additional lines of credit.
Uncertain times – Finally, financial markets and trade wars have put the automotive market in a bit of a shaky situation. The Federal Reserve has signaled two more interest rate hikes this year. While the cost of fuel is currently low, fractured discussions with OPEC countries could have an impact at the end of the year. Ongoing trade battles and tariffs could dramatically increase the price of automobiles – or make certain models unavailable. Frank discussions between lender and customer on these topics can make a purchase now the right decision.
Promoting a “sale” mentality to your lender team can have an energizing effect. And, supporting your dealership partners in their efforts to move 2018 inventory is beneficial for the relationship. With more than 40 years in innovating and implementing proven go-to-market strategies in the retail automotive space, EFG Companies knows how to position your institution to make the most of the retail sales cycle. Contact us today to get started.
