Categories
Business Growth

Get a Jump on that Loan

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

I admit it. I fell victim to Amazon Prime Day. However, I still stuck to my guns and completed my due diligence for every purchase. For me, that included researching the price on multiple sites, checking out customer reviews and ratings, and reading the small print on the product description.

I’m not alone in my habits. An Ernst & Young study showed that more than two-thirds of customers now spend less than 10 hours to research their vehicle purchase – down from 15 hours in 2016. This same study showed that consumers spend more time online researching a vehicle than any other online purchase!

In fact, a recent Cox Automotive study found that 43 percent of consumers want to apply for financing or pre-qualify for a loan online. Furthermore, the amount of time spent completing a car purchase is the primary complaint for consumers. Less than half of the car-buyers surveyed were satisfied with the length of the car buying process.

How frequently do your customers contact your financial institution to pre-qualify for an auto loan? Have you run the numbers on your conversion rates between website page views, completed applications, and actual loans finalized? How often do consumers “shop” your site for auto loan rates? If you don’t have the answers to these questions, it’s likely you are losing money on your digital footprint.  Let’s look at some of the areas you should track and manage.

Categories
Compliance

We’ve Been Down this Path

Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

The Consumer Financial Protection Bureau (CFPB) has been in the news a lot lately.

From Acting Director Mick Mulvany’s decommissioning of the Advisory Committee, to a federal district judge ruling its structure is unconstitutional, some might think that the CFPB’s days are numbered.

But history has a lesson to offer, compliments of the Federal Trade Commission (FTC). The FTC was created on September 26, 1914, when President Woodrow Wilson signed the Federal Trade Commission Act into law. The regulatory agency opened its doors in 1915, with a mission to protect consumers and promote competition. The FTC building was finished in 1938, with President Franklin D. Roosevelt stating, “May this permanent home of the Federal Trade Commission stand for all time as a symbol of the purpose of the government to insist on a greater application of the golden rule to conduct the corporation and business enterprises in their relationship to the body politic.”

Currently, the FTC houses three bureaus:

  1. the Bureau of Consumer Protection
  2. the Bureau of Competition
  3. the Bureau of Economics

Each bureau has a set of mandates to guide its work. In the early 1970s, the agency became more aggressive in its prosecutions and sanctions. The business community and Congress criticized the FTC’s activism, claiming it had become too powerful, was insensitive to the needs of the public and business, and operated with little oversight from Congress or the president. During President Ronald Reagan’s first term, control of the FTC was moved under the president. Its direction was modified to become more cooperative with business interests, while continuing its consumer protective functions.

A Matter of Checks and Balances

Categories
Economy

Breaking Out of the Groundhog Day Cycle

Mark Rappaport President Simplicity Division EFG Companies
Contributing Author:
Mark Rappaport
President
Simplicity Division
EFG Companies

I’m sure you’ve seen the 1993 movie Groundhog Day starring Bill Murray. His weatherman character disparages his assignment to cover the annual groundhog event, only to wake up the next day…and the next day…realizing he is inexplicably reliving the same day over and over again. Filled with cynicism, Murray fails to “flip the script” on his predicament and must suffer the monotony.

A lender client shared a similar sentiment with me concerning the recent rise in defaults, bemoaning how auto loan volume, defaults, and delinquencies all follow the cycle of economic ups and downs. The economy tanks and auto loan volume goes down while defaults and delinquencies go up. The economy is on the upswing and auto loan volume goes up while defaults and delinquencies decrease. It’s the same old story every year.

With a plateau in vehicle sales and elevated auto loan defaults, everyone is wondering if after ten years of an expanding economy, we are on the tipping point to a down economy. But, let’s take a look at the numbers.

The Great Recession was tipped by mortgage defaults, not auto loans. However, the behavior has some similar undertones.  Subprime borrowers are suddenly missing payments within a few months of the vehicle purchase. This reflects the early signs of the subprime mortgage crisis in late 2006 and early 2007.