The car financing process has always been one of stress for potential car buyers. They have selected the car of their dreams, and now a representative from the finance department has the task of working with the credit history of customers to find a deal that fits them. It is often a long process that can weigh on the comfort-level of both parties.
According to Autotrader’s 2016 Car Buyer Journey study, customers were least satisfied with the long purchase process and interactions with the finance department. The length of time is not the only financing process component dealers should be concerned with. A Consumer Financial Protection Bureau report revealed a trend toward customer’s taking out longer and riskier six-year auto loans. Six-year loans have a tendency to be used by car buyers with lower credit histories and higher rates of default.
Can Easy Financing Come Before Car Buying?
Well, one way is to facilitate a process where customers can quickly locate financing first, and then shop for a vehicle in their budget. A WardsAuto article revealed that a major bank has already jumped on this service by partnering with dealerships through a new program. Ally launched Clearmatch in March 2018. Clearmatch allows shoppers to have the opportunity to pre-qualify for pricing online and then search for vehicles that fit the loan amount. Dealers can then present their vehicle pricing online in real-time to connect customers who have already gone through the loan approval process.
Taking the Wait Away
Again, customers are growing tired of the long and arduous purchase process that requires them to fill out multiple pages of paperwork, wait for word from banks, and hope that a deal comes their way. Ally has sought to eliminate the in-house financing process through Clearmatch. Consumers can get pre-qualified without any impact on a credit score, compare offers from multiple financing sources, browse numerous vehicle options from dealers, and receive online loan approval. Customers can then take their loan approval certificate into the dealership to significantly speed up the buying process. Car buyers get shorter wait times, while dealers receive happier and more satisfied customers.
Flexibility is Becoming the Norm
Ally is not the only institution helping customers to pre-qualify, Capital One, Nationwide, and local credit unions all offer the same service. However, Ally is not only marketing the pre-qualify service, but they are also actively partnering with dealers to ensure a smooth process. While pre-qualifying for a loan is an option dealers can begin to inform customers about, it is not the only way to promote flexibility. A recent article in Auto Finance News revealed that flexible finance deals and financing for private party transactions are ushering in a new wave of options. Customers may begin to seek out structures that facilitate a cross between renting and leasing a vehicle for a shorter-term period —two to three years— for a lifestyle that may not need a permanent mode of transportation. Another option for dealers is to finance peer-to-peer sales. The future of car financing is trending more toward flexibility.
The Ultimate Goal
The goal for dealers should always be to put the customer’s needs first. If they start off the customer-dealer relationship by showing they are willing to provide resources to help ease the car buying process, then customers will be more willing to invest in what the dealer has to offer. As stated above the financing process has always been one of anxiousness, stress, and frustrations. Some customers have no idea what impact their credit histories will have on the purchase of their next car. Ushering these individuals into the method of getting the financing out of the way first can curb disappointment, and speed up the whole car buying process. The benefits far outweigh the cons in this alternative structure for both parties.