Technology speeds up automotive financing, allowing qualified car buyers to get in and out of dealerships faster than if they were awaiting human approval of a loan.
But there are limits to automated loan decision-making that relies on algorithms, risk ratings and financial data crunching.
Such systems, while useful, shouldn’t replace relationships, especially the ones between lenders and dealers, according to panelists at a recent American Financial Services Assn. conference.
“Technology can’t become an electronic curtain,” says David Paul, American Honda Finance’s senior vice president-financial services. “We need to keep up those relationships, particularly our credit desk.”
Automated lending particularly aids in quickly approving financing requests from dealership customers who aren’t saddled with serious credit issues.
“Technology helps us through the easy transactions,” says Ian Anderson, president of Westlake Financial Services. “It frees our people to be more available, when needed,” especially in cases when a lender wants to take a closer look at a credit application.
Electronically processing loans helps avoid needlessly delaying creditworthy dealership customers who are anxious to obtain financing and drive off in a newly purchased vehicle.
Some dealerships are working on completing vehicle transactions, or at least a large part of them, in an hour or less.
“We’re doing what we can to help there,” says Dawn Martin Harp, Wells Fargo’s head of dealer services.
She adds: “Personal relationships are what it’s all about. We meet with dealers constantly.”
Dealer-lender relationships are special, Jeff Carlson, chairman of the National Automobile Dealers Assn. tells attendees of the AFSA conference. “You compete for our business, so you understand us.”
