Today’s car customers have more control over the auto financing process than ever before, but many are still struggling to navigate the post-pandemic car market. On this episode of Inside Automotive, Andy Mayers sits down with host Jim Fitzpatrick to discuss how lenders can better serve buyers in this new environment. Mayers is the Lender Strategist at Cox Automotive, where he has worked for more than 30 years to develop innovative solutions for automotive F&I.
Mayers notes that auto lenders have become more digitally proficient in response to COVID. The pandemic forced many businesses to expand their online services, and auto financing was no exception. This shift has also changed the relationship between loan borrower and loan provider. Before, credit origination was the responsibility of F&I companies, but today’s car buyers now find and compare options before ever speaking to a representative. “Probably, what you’ve seen the most of…is the move of the [originations] funnel, where a consumer is driving it instead of a dealer,” he explains.
One of the chief issues facing today’s auto consumers is affordability. Virtually every cost of buying a vehicle, from loan interest rates to monthly insurance payments, has become more expensive. While this issue was present even before the pandemic, it grew significantly worse in the two years following the initial COVID outbreak. This has left many buyers unable to afford new cars or struggling to pay off their old ones. As a result, loan delinquency rates are on the rise, making the market more dangerous for auto financing companies. To protect their interests, Mayers notes that F&I providers have adopted risk-averse strategies, approving loan applications with more care while tightening policies to minimize damage.
Mayers encourages lenders to focus their energy on both speed and customer service. “There’s a lot [areas needing] efficiency still out there,” he notes, such as accelerated title capabilities, digital contracting, etc. Loan providers should also take the fact that customers are more involved in the auto financing process to heart. Although F&I companies and dealers are familiar with industry lingo, the terminology can easily confuse buyers. “That’s what we’re telling a lot of our lenders…how do you make sure you communicate your decisions back in a way that a consumer will understand it,” concludes Mayer.
