Lenders able to assist customers who see the car-buying process as unclear or confusing have a “white knight” opportunity, Gillund said. Open Lending’s study revealed 83 percent of consumers without vehicles said they would use the same lender for other financial services if they had a good auto loan experience.
“That’s really, really impactful,” Gillund said.
Lenders can launch a long-term relationship with a consumer by offering a simple and transparent loan process to subprime and nonprime borrowers, she said.
Roe told Automotive News the survey’s finding on lender loyalty “absolutely” applied to direct-to-consumer lenders seeking to capture business. He said some large direct lenders have driven away customers without prime credit scores, who have been “almost trained” to use competitors or pursue auto loans at dealerships.
But Roe said he thought lenders also could convert a previously indirect customer — one brought to the institution through a loan arranged by a dealership — to one who would seek out the creditor on future loans.
“The most unloyal consumer of credit is the prime borrower,” Roe told Automotive News. They’ll use whichever lender has the lowest rate, he said.
But a consumer with weaker credit who had a good loan experience with a particular financial institution would be likely to return to that lender because their credit would still be flawed, Roe said.
Lenders might need to rethink their strategies to achieve the kind of success Open Lending suggests.
“We have seen many lenders over the years try to serve the near- and nonprime consumers only to fall short,” Roe said in a statement. “Often these lenders will place stipulations or conditions on the loan, limiting the consumer’s ability to accept the loan as approved. Ultimately, the consumer ends up at a dealership and presents their desired monthly payment only to be backed into a loan that is the most profitable for the dealership, regardless of the best rate for the consumer.”
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