By John Flynn, Open Lending CEO & Chairman
As we came into 2020, things were looking pretty stable for auto lending. Late in the first quarter, Experian released its State of Automotive Finance Market Report, portraying that while loan balances were slightly down, so were delinquencies. Additionally, average credit scores increased slightly, and banks were winning more business.
To top that off, according to the Federal Reserve, loan rejections had spiked in the prior year to 8.1%, but the slowing market and drops in the Prime Interest rate had started reversing this trend. Then the pandemic hit, and things clearly changed for everyone.
We wrote about risk mitigation in our last post, so let’s take the time to ensure you’re working with your partners on the right solutions for your members.
Prior to the pandemic, consumers were beginning to drive the business to digital delivery. Many want to fill out the paperwork in the comfort of their home, upload and sign documents from their couch on their choice of device – whether mobile phone, tablet or computer. Moving forward through these current challenges, have you reviewed trends to prepare and combat them as needed?
Members are becoming accustomed to instant gratification and seamless delivery mechanisms. Think Netflix and Amazon. Have your decisioning systems and criteria kept current with the times by making the best decisions quickly?
At Open Lending, we’ve built a platform that allows our lending partners to define the decision criteria, and then leverage our platform to make a sound lending decision in seconds on whether or not to fund the loan. This prevents embarrassingly long wait time for consumers whose credit may not be perfect and meets the demands of your indirect auto loan dealer-partners. Learn more about how Open Lending’s Lenders Protection can help you say ‘yes’ to more auto loans!
Auto lending is on an uphill trend, and we’re seeing an increase in contactless vehicle delivery. Ensuring solutions and business practices are available to support consumer demands in these crazy times is paramount. To make the process even more painless for all involved, consider solutions for photo capture of identification and electronic signing of documents. These should also include notification to the customer of these requirements and digital confirmation of completion.
Consumers want to find accurate, relevant information online to get themselves the best deal. They want to have an idea of what they're looking for as they shop for a car, and pricing certainly factors into that. Can they afford the monthly payments? Provide calculators for them to determine quickly and easily what’s within their price range.
The coronavirus pandemic was a clear wakeup call that digital must be a priority for lenders’ strategic goals. Those banks and credit unions that were further along their digital transformation journey prior to the pandemic have been more successful. As we head into 2021, consumer expectations have accelerated to expecting more online services. Will you make the shift as well?