Category: Business Growth

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Business Growth Economy

Don’t Settle for More of the Same

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

Q4 2017 has finally arrived. Are you on track to meet your auto loan volume projections?

Vehicle sales numbers are flowing in and so far it looks like the projections for a flat market have panned out, even with the upsurge in sales in flood-damaged areas. The Federal Reserve raised interest rates twice this year, and expects to raise them once again in December. Credit Union auto loan market share saw an 8.5 percent increase in Q2, according to Experian. Consumer spending grew marginally in Q3, by 1.5 percent, while consumer confidence decreased in September.

All signs point to more of the same in the coming months. Unit sales will still eke out at around the same volume as last year. The combination of raising interest rates and lackluster consumer confidence will create an atmosphere where consumers are more hesitant to make those big-ticket purchases.

In auto lending, this means increased competition for the available supply of consumers in the market for a vehicle. As you take the time in Q4 to prepare for 2018, it’s important to evaluate how to differentiate your institution with both dealers and consumers.

Evaluate your value proposition through the optics of building a relationship:

  • Do you instill the value of providing superior service across your institution?
  • Are your dealer partners well versed in how you fund and your funding requirements?
  • How quickly does your institution respond to an application?
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Business Growth

Preparing for a Surge in Auto Financing

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

While everyone is following the news coverage of the impact of Hurricane Harvey, the estimated 500 auto dealers in the Houston area affected by the hurricane are already working to get back up and running. According to Automotive News and Wards Auto, dealers in Southeast Texas expect a surge in car buying as people begin receiving insurance payouts for their damaged vehicles. This means that there will also be a surge in auto financing, and lenders will need to be prepared to help dealers manage their time with each customer wisely.

It can be expected that there will be a period of “downtime” while both dealers and consumers survey their homes and businesses to understand the full scope of the damage. This “downtime” provides lenders the perfect opportunity to prepare their operations for when consumers in the seventh most populated market in the U.S. begin car shopping en masse.

One of the biggest challenges during a car-buying surge is simply servicing the increased traffic. Dealers will often extend their hours as part of their overall strategy to capture as many sales as possible. With that in mind, now is a good time to begin preparing your team to work longer hours to ensure auto loan officers are available during longer dealership hours.

It’s also important to remember just how easy it can be to crash an online platform when a large number of users try to use it all at once. Take the time now to work out a solution with your IT team for a surge in online applications sent via your dealer portals and through your website directly from consumers. Preparing your digital platform to have the bandwidth to handle a significant increase in traffic will help make sure you are able to capture as many loans as possible with no disruption to dealer service.

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Business Growth

Your Dealer Relationship Checklist

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

You’ve implemented strong technology solutions to provide dealers with automatic approvals and denials. You’ve created robust mobile applications to foster strong relationships with consumers. You might even have gone completely digital with all loan services. In the race to provide dealers and consumers with instant credit descisioning, have you lost the human element of building relationships?

According to J.D. Power and Associates’ 2017 U.S. Dealer Financing Satisfaction Study, lenders need to refocus on communication and dealer relationships. This annual study measures dealer satisfaction with auto financing providers, based on application and approval processes, provider offerings, and sales rep relationships among other factors.

It’s time to get back to basics when it comes to developing business relationships, especially with auto loan originations on the decline. TransUnion announced that auto originations fell for the third consecutive quarter in their most recent quarterly Industry Insights Report.

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

  • When an F&I manager 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?
  • When your representatives visit dealerships, do they just drop off donuts and coffee, or do they make a point to sit down with dealership management and discuss how your institution can be a better partner?
  • 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 make it easier for F&I managers to upsell consumer protection products to boost their margins?
  • Do your loans provide consumers with value that insulates them from significant impacts to their savings?
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