National Automobile Dealers Association 5 Top Lending Trends to Watch
Since 2017, sales in the auto lending industry have been declining, and are predicted to continue the downward trend through 2018 and possibly even into 2019. Owners are keeping their cars longer, car sharing services dissuade city-dwellers from buying their own vehicles, and rising interest rates make customers wary of accumulating debt. All these factors lead to greater competition among dealers, so how can they best position themselves to stand out to potential customers for dealer assisted financing?
Move to cloud-based payment platforms.
New cloud-based technology means faster implementation, continuous service and new functions, up-to-date software, and the opportunity to initiate loans anywhere there is an internet connection. Going digital eliminates costly and time-consuming paperwork, making it easier for both lenders and customers to receive or make payments anytime, anywhere; with a simple, intuitive user experience for their customers, resulting in more on-time payments.
Use analytics to drive portfolio optimization.
Accessibility of cloud-based platforms means that analytics are no longer bound to specialists. Integrated tools now allow lenders themselves to identify patterns, trends, and anomalies in their portfolios. Even without an in-house analyst, lenders can collect information on profitable deal sources, risky borrower characteristics, eliminate bottlenecks in loan processes, and even capture ratios by week, month, or year. Appling analytics to the portfolio gives lenders additional insights into where and why they are profitable and where and why losses occur.
Differentiate by reducing customer journey friction.
According to a study by The Financial Brand, 61% of banks listed “removing friction from the process” as a priority for 2018 and beyond. Online lending-as-a-service (LaaS) platforms and fintech systems make processing payments faster, easier, and safer, providing secure transactions for lenders and giving customers peace of mind. As one of the fastest growing trends, omni-channel payment experiences allow customers to access their accounts how they want, either via a web-based interface on desktop, or mobile optimized on any device, or a more digitized experience on your website. This is also supported by features such as live customer service, meaning lenders can cut down on pitfalls without losing any experience quality for customers.
Cater to the millennial buyer.
Real-world vehicle registration data recorded that millennials accounted for all new vehicle sales growth in the North American auto industry in the first quarter of 2018, and that there was a 1.8% increase of millennial market share from the first quarter of 2017. Meanwhile, Generation X market share remained stagnant, and the “mature market” and Baby Boomer market share both fell. This all points to the rising prominence of millennial buying power as the largest consumer demographic. Dealers can further appeal to millennials who are familiar and comfortable with mobile-first platforms with payment reminders and mobile wallet integration..
Hispanics hold up to 17 more years of buying power.
According to a Univision Hispanic Financial Journal study, Hispanics have the most years of effective buying power compared to White, African American, and Asian American consumers based on life expectancy and median age of all four racial demographics. The study also shows that Hispanic customers value trust, ease of doing business, and reputation. Highly engaged in mobile fintech activities and increasingly interested in auto loan financial products, Hispanic customers represent an extremely valuable and nascent consumer group at the intersection of fintech and lending.
Talk to a solution expert today to find out how these trends will affect your specific business and how a mobile-first payment solution can help you gain more market share in 2019
Dealers seeking a fresh alternative to traditional auto lending methods can put their trust in PayNearMe, a mobile-first complete solution for processing cash, debit, credit and ACH payments. Compatible with existing lending systems, PayNearMe additionally offers features such as payment reminders and mobile wallet integration, so lenders and consumers alike can enjoy faster payments, more convenience, security, and full transparency.