Transparency boosts outcomes for customers, dealers and lenders
For many consumers, sharing their personal financial details with an auto dealer can be a sensitive topic.
Today, dealerships are working harder than ever to transform negative car-buying stereotypes by infusing increased transparency throughout the sales process. From dispelling customer misconceptions around auto financing to optimizing common credit resources and improving lender communications earlier in the underwriting process, dealers are embracing transparency. As a result, they’re gaining a unique competitive edge.
Gaining consumer confidence is key
When vehicle shopping, customers hold back from dealers for a number of reasons. Some are unsure about their credit situation, worried they won’t qualify and fear the embarrassment of being turned down at the dealership. Others simply don’t understand how the financing process works, so they hold their personal information close to the vest, and think they can use it to negotiate a better deal.
In these cases and others, dealers are rising to the occasion to become advocates for their customers. By sharing details around the financing process and explaining exactly how the customer’s information will be used, dealerships are breaking down walls that separate them from quality customers. In the process, customers are realizing that less-than-perfect credit isn’t always a deal breaker, and that other factors such as their recent positive credit performance, job stability and more can help them secure favorable auto financing.
Moving past just the credit score benefits everyone
Instead of putting together deals initially based on a credit score, more dealerships are taking time to read a customer’s full credit report for additional clues that can help them: 1) pause and ask questions around a potential red flag, such as possible fraud, before requesting quotes from lenders; or 2) accelerate loan approval, improve financing terms and minimize stipulations by providing lenders with relevant, supporting information early in the process.
For instance, most reports include a list of recent credit inquiries and an address history, both of which can help dealers and lenders better understand customers. A stable address history could be a positive indicator, while a flurry of inquiries from auto dealers might mean the customer is having trouble getting financed.
In either case, the information can prompt a proactive conversation with customers to better understand their credit strengths and weaknesses. Dealers can then make adjustments early in the process—maybe choose a more appropriate vehicle or acquire additional data such as instant employment and income verification—to improve the customer’s experience and drive a positive outcome for all parties involved.
For example, instant verifications are electronically performed in the same amount of time it takes to pull a credit report. Apart from positioning your customers and your dealership for consideration from lenders that offer the best rates, providing verified employment and income also helps minimize lender stipulations, prevents dealers from sending customers home to search for pay stubs and helps combat the real issue of fraudulent pay stubs.
In the end, dealerships get more looks from top lenders. Customers are more likely to receive the best possible rates and terms, while also enjoying a smoother, faster and more positive buying experience. Lenders get cleaner, more secure deals with fewer stipulations.
The content for this article was originally published by Angelica Jeffreys in the February 2016 issue of NIADA Used Car Dealer magazine and on NIADA.com.
Recommended For You
Auto Leaders Want to Make Car Buying Easier Leaders of the National Independent Auto Dealer Association (NIADA) met in Las […]
The Oldsmobile Toronado was one of the most popular cars in America in 1977. It had a T-Top roof design […]
Auto Dealers and Lenders Still Unclear on MLA We all respect and value our service members, and what they do […]
Auto lenders and dealers want more knowledge and faster information about their markets and customers—on and off the lot so […]