How Lenders’ Response Time Influences Dealer Relationships

© Can Stock Photo / karenr

Automotive OEMs rate vehicle performance by the time it takes to go from zero to 60 in seconds. This is a measure of energy conversion – fuel, spark, movement. While this is a mechanical situation, a comparison can be made to business response times. While fuel is a potential auto loan customer, the spark is a call from a dealer partner, and movement is how quickly your lending team responds to lock down the deal. Have you measured your lending team’s zero-to-60 response time? In this hyper-competitive lending climate, response time truly means the difference between a win and a lost opportunity.

A recent report, published by Auto Finance News’ parent company Royal Media, analyzed 6,200 dealer evaluations to identify core traits which prompt dealers to choose one lender over another. One component of the report tracked callback time. On average, credit analysts returned calls in 65 minutes. Prime loan applications generated a response time within 56 minutes. Subprime application response time lagged to within 75 minutes, according to the report. In comparison to credit unions, banks, and finance companies, captives had the fastest callback time at 62 minutes.

Is there a distinct difference in a lender’s response time based on a customer’s creditworthiness? Of course, there could be extenuating circumstances impacting these response times. Is the type of application outside the lender’s target portfolio? Is the call coming from a preferred dealer who offers only prime applications to specific institutions? The data can be sliced in numerous ways. However, given the large sample size, the report bears attention.

Beyond the phone response time, dealers also voiced their opinions on “partner performance,” including criteria such as accessibility, information-sharing, honesty, professionalism, sincerity, intuitiveness, and an upbeat attitude. It’s no longer enough to have the best rates in town. Lenders must also be excellent partners in order to secure the best deals.

While these soft skills can be difficult to measure, they are vital to building successful relationships with dealer partners. Additionally, it’s imperative that you address the question of whether you are providing tangible value to both dealers and consumers. One of the best ways to accomplish this is with complimentary consumer protection products, such as a limited powertrain warranty, vehicle service contracts, GAP, tire and wheel protection, paintless dent protection, or vehicle return protection.

Structuring your loans with strategic F&I products makes it possible for dealers to increase their PRU through upsell opportunities, which in turn:

  • Attracts and retains dealership partners
  • Increases year-over-year auto loan volume and financial control
  • Expands per month income
  • Reduces default rates
  • Decreases repossessions and collection costs

The bottom line is dealers want a partner that has their best interest at heart. One dealer comment in the report stated, “I would choose the hard-working rep over the bank with the lowest rates that have no interest in building relationships with their dealers.”

So check your team’s response time, reinforce good partner qualities, and be an ally for your dealer partners. Chances are, you’ll win the competition battle in 2019.

With more than 40 years administering consumer protection products and working hand-in-hand with dealers across the U.S., EFG Companies knows how to structure your loans to be more attractive in the F&I office with F&I products custom-tailored to match your dealership partners demographics. Contact us today to find out how.

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