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Mark Rappaport President Simplicity Division EFG Companies

Contributing Author:
Mark Rappaport
Simplicity Division
EFG Companies

Chatbots. Artificial intelligence. Voice prompts. Phone trees. Digital avatars. Truly, technology is advancing at a rapid pace, especially in the retail automotive lending space. One example is the use of automatic approvals to increase loan volume in the dealership. Will technology sound the death knell to human interaction in the lending office? Or, will it open new ways to engage with a digitally savvy population? Consider the ways technology can impact the human element in auto lending.

Impact on Human Resources

Experts have long predicted technology will someday replace many of the jobs done by humans. However, history has shown that as jobs become more automated, new opportunities open up. Today’s students are encouraged to prepare for technology-based finance and banking jobs like data analysis and computer programming, whereas four decades ago they would have been steered toward a more manual, hands-on position. Technology has also greatly improved worker productivity, increasing the number of daily transactions.

Impact on Customer Outreach

Thanks to social media and the internet, reaching consumers is easier than ever. It is also a great equalizer, enabling even the smallest lender to compete with large, multinational institutions for auto lending business. Using do-it-yourself website tools and social platforms, any lender can engage with target customers, position their offerings, and build relationships. The digital playing field also comes with reduced marketing costs that create parity between large corporate lenders, smaller local institutions and even innovative startups.

Maintain That Human Touch

While it’s clear that technology is marching on, changing demographics make it clear that embracing technology only makes good sense. However, it’s important that lenders don’t lose that human touch. According to J.D. Power and Associates’ 2018 U.S. Dealer Financing Satisfaction Study, the lender relationship is the heaviest weighted driver of dealer satisfaction. “Satisfaction declines by 163 points on a 1,000-point scale when dealers are not able to reach the credit staff,” said Jim Houston, Senior Director of the Automotive Finance Practice at J.D. Power. “Additionally, if lenders can communicate the best contact for dealers to reach out to for non-traditional questions, the resolution time decreases, which will, in turn, increases dealer satisfaction.”

The same holds true for consumers interacting with lender programs online or on mobile. We’ve all been frustrated when trying to get a simple question answered and we get stuck in a phone tree.

So, what does it take to develop strong dealer and consumer relationships? When pondering this question think beyond quick loan descisioning and interest rates. It takes superior service and a strong value proposition.

  • When someone calls about an application, are they met with a phone tree or an actual person?
  • Are your loan officers courteous and respectful when speaking with dealership personnel?
  • If your system flags a loan application as incomplete, do your loan officers just ignore it and assume the dealer will figure out the mistake when no funding decision is made, or do they proactively call dealers to address the application?
  • Does your auto financing department operate on dealership hours or banking hours?
  • How often does your institution proactively provide in-person training and updates on your loan requirements, taking into account the high-turnover nature of retail automotive?
  • Aside from APR, how is your auto loan different from the competition?
  • Do your loans provide consumers with value that insulates them from significant impacts to their savings?

By focusing on your service model, rather than just numbers and rates, you are more likely to close more loans and cement your relationships with your dealer partners.

In addition to a strong service model, 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 through the use of complimentary consumer protection products, such as a limited powertrain warranty, vehicle service contracts, 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

With more than 40 years in 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 target demographics. Contact us today to find out how

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