In an industry ripe for innovation, auto finance veteran Pete MacInnis, CEO of eLEND Solutions, is leading the charge. As car buying and financing evolves, MacInnis tackles the pressing need for transparency and accuracy in the digital age on the latest episode of CBT Now.
Key Takeaways
1. MacInnis reflects on the significant changes in auto finance over the past 20+ years, noting the transition from fax machines to digital platforms like Dealertrack and RouteOne. He emphasizes that since these innovations, there hasn’t been a major positive disruption in the auto finance space. The COVID-19 pandemic accelerated the push towards digital retailing, with companies like Vroom promoting the idea of seamless online car purchases. However, these companies often over-promised and under-delivered, particularly around the complexities of financing.
2. The interview highlights a significant disconnect between the promises of digital retailing companies and the actual complexities of the auto financing process. Terms like “penny-perfect payments” were misleading, and digital platforms failed to account for the intricacies of customer qualifications and financing. Surveys conducted by eLend Solutions revealed a gap between what digital retailing companies advertise and what dealers and lenders experience, particularly in terms of payment accuracy and customer expectations.
3. Affordability is a major concern in the current auto market, with the average price of new cars around $50,000 and monthly payments exceeding $700. Surveys indicated that both dealers and consumers place a high importance on knowing monthly payments upfront. 68% of dealers consider the payment as crucial as the sales price, and 93% of consumers want to know their monthly payments at the start of the car-buying journey. This underscores the need for transparency and accuracy in quoting payments early in the sales process.
4. Dealers are increasingly responsive to the need for transparency in financing. Despite historical fears that early disclosure of financing terms would lead to customers shopping around for better deals, a significant number of dealers now provide online payment calculators. However, the accuracy of these calculators is often based on customers’ estimated credit scores, which can lead to discrepancies. The interview reveals that over half of the dealers’ payment quotes can be off by $50 per month, resulting in substantial financial differences over the life of a loan.
5. eLend Solutions is set to launch a new FinTech platform called ‘Deal Maker’, which aims to address many of the issues discussed. This platform seeks to integrate lenders more seamlessly into the sales process, enhancing both transparency and accuracy in financing terms. The goal is to improve the car-buying process for consumers, dealers, and lenders by eliminating bottlenecks and disconnects. The platform has undergone years of development and is ready to pilot with high-profile dealers, potentially marking a significant advancement in auto finance technology.
“When we talk about the last major thing that happened to be Dealertrack and RouteOne eliminating fax machines, we believe 'Deal Maker' is the next big step. It integrates sales and finance, meets customer expectations, and eliminates bottlenecks and profit leaks for both dealers and lenders.” – Pete MacInnis
