Tag Archive | "lender"

J.D. Power: Speed No Longer Top Consideration When Selecting Finance Sources

DETROIT — When it comes to choosing lender partners, dealers value the type of relationship they have with their finance sources over the speed of their services, according to J.D. Power’s 2016 U.S. Dealer Financing Satisfaction Study.

Jim Houston, senior director of the automotive finance practice at J.D. Power, said finance sources need to shift from a transactional relationship with their dealers to a more consultative one.

“Speed has been king and the area lenders have traditionally focused on, but as the market gets tougher, lenders need to center their attention on their relationships with dealers, or they are going to lose business,” Houston said.

The first step to success, Houston noted, is communication. According to the study, fewer than half of dealers receive consistent sales rep calls or visits from their finance sources — both of which can boost overall satisfaction by as much as 6.8% and 7.5%, respectively. However, it’s not just about frequency, he added. The nature of the calls or visits is what really adds value to the relationship.

“Dealers value a lender that can help them handle the tough issues and solve those outside-the-box situations,” Houston said. “This is where having the right people focused on their dealers and helping them execute their strategic plan is essential.”

There are three things that dealers want from their lenders but aren’t necessarily getting on a consistent basis, Houston noted. Dealers want their lenders to maintain consistent performance among their dealer relationship managers, identify their best dealers and prioritize those relationships, and to focus on areas most important to dealers. Finance sources that are able to meet these expectations, he added, will reap a greater share of the business.

The study also found that there was a correlation between high satisfaction ratings among finance sources and how much business dealers send to those respective lenders over the next year.

Sixty-two percent of dealers who indicated they were 90% or more satisfied with a lender said they would likely increase the amount of business they would send to that lender over the next year. However, as soon as satisfaction with a lender begins to dip, the expected increase in business drops dramatically. As soon as a lender’s satisfaction rating drops below 90% to 80%-89%, according to the study, the amount of dealers who indicate they’d send more business toward that lender plummets to 37%. That amount drops to 22% when satisfaction ratings drop to 70%-79%.

While the study found that speed was no longer the leading factor for dealers deciding on a lender partner, it still plays a significant role. Dealer satisfaction increases by as much as 6.4% when lenders fund error-free contracts the same day they are submitted, the study found. If lenders notify dealers of contract issues within four hours of submission, satisfaction increases by as much as 6%. Additionally, a well-managed exception process can increase overall satisfaction by up to 7.9%.

When it came to satisfaction ratings, Mercedes-Benz Financial Services and BMW Financial Services were the clear winners of the study. Mercedes-Benz Financial Services placed first across all three of the segments the study looked at: prime retail credit, retail leasing and floor planning. BMW Financial Services placed second across all segments.

The 2016 U.S. Dealer Financing Satisfaction Study captured more than 20,000 finance provider evaluations across four segments. The evaluations were provided by 3,100 new-vehicle dealerships in the United States.

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Ally Tops Experian Rankings

DETROIT — Experian Automotive announced that Ally Financial was the top consumer auto sales financier in the U.S. marketplace. Ally accounted for more than one in every 11 vehicles financed in the U.S. last year, with more than $40 billion in consumer financing contracts for new or used cars and trucks.

“Ally has grown and diversified its business during the past couple of years, supporting the resurgence of the U.S. auto industry,” said Bill Muir, president of Ally. “We now have retail financing relationships with more than 14,000 dealers in the U.S. … Our strategy is to offer a full range of financing products and services — from retail financing and leasing, to commercial loans and remarketing services as well as vehicle service and maintenance contracts. We finance a broad spectrum of creditworthy customers, and we are committed to supporting the auto industry for the long term.”

Experian Automotive reports Department of Motor Vehicles registration information from all 50 states. Four states (Wyoming, Delaware, Rhode Island and Oklahoma) do not report the financing source for auto loans.

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Capital One Launches Diamond Dealer 3.0

PLANO — Capital One Auto Finance announced the launch of Diamond Dealer 3.0, an upgraded version of its preferred dealer program that promises full-spectrum lending and improved services to dealers.

Kevin Borgmann, the business unit’s top executive, described Diamond Dealer 3.0 as taking the program “to the next level,” and added that the enhancements will allow the company to add more Diamond Dealers but remain focused on service, flexibility and partnership for a select group.

“We want to build relationships,” Borgmann said in an exclusive interview with F&I and Showroom magazine. “We want to be our dealers’ top noncaptive lender. … We will increasingly reward dealers who give us a greater share of their business.”

Borgmann said that dealers who join the program will enjoy benefits such as speedy callbacks and funding, as well as direct contact with dedicated buyers who have the authority to make exceptions when appropriate, including on weekends.

Greg Brown, owner of Southern California’s Buena Park Nissan and Puente Hills Nissan, became a Diamond Dealer earlier this year. He said the program’s flexibility already has paid dividends for his operation. “It’s a simpler process for turned-down deals,” Brown said. “When the computer says a customer isn’t creditworthy, human interaction can help to clear that up.”

Brown said that he now finances at least 40 deals per month with Capital One across the credit spectrum, and he expects that volume to increase. Borgmann believes that those who join the program in the months ahead will follow a similar path. He said that, faced with increasing competition for originations, the Capital One team elected to continue to focus on building relationships.

“Rather than focusing on market share for its own sake, we want to build great relationships and really serve dealers’ needs,” he said. “When we do that well, we see profitable and sustainable growth. That’s great for dealers and for us.”

Borgmann also stressed the inclusion of Capital One’s prime lending campaign, which now has a nationwide footprint, as key to the program’s success.

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Medallion Bank Joins AppOne Platform

MINNEAPOLIS — Wolters Kluwer Financial Services announced that Medallion Bank has joined its AppOne platform, which automates the indirect lending, credit approval and compliance processes for lenders and the RV and marine dealers with which they work.

“With current economic challenges, dealers need access to more nonprime lenders in particular — even for customers that have good financial standing,” said Jason Marx, vice president and general manager of indirect lending and mortgage at Wolters Kluwer Financial Services. “Working with Medallion Bank supports our goal to provide dealerships with a complete portfolio of lenders to help with the various financing needs of their customers.”

Medallion Bank specializes in financing customers with past credit problems and provides financing to bank-approved marine and RV dealers across the country.

“Not only will AppOne help us simplify our loan approval and origination process, but it will also help us connect with more marine and RV dealers across the country,” said John Haymond, vice president of business development at Medallion Bank. “This is a key benefit for our business as we focus on sustainable growth.”

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BofA Adds Online Auto-Buying Service for Consumers

Bank of America Corp., the biggest U.S. lender by assets, set up an online service that lets customers apply for loans and shop for new and used cars and trucks.

Bank of America’s network of more than 4,000 auto dealers will list their inventory on the website, which uses a platform developed by TrueCar Inc., according to a statement by the Charlotte, North Carolina-based bank.

TrueCar, an online vehicle-pricing provider based in Santa Monica, California, has network-sharing agreements with other lenders including Capital One Financial Corp. and shopping websites such as those run by EBay Inc. and Overstock.com Inc., said Chintan Talati, a spokesman.

Dealers using TrueCar’s network, called Zag, sold more than 100,000 new cars this year though Nov. 12, Talati told Bloomberg in a telephone interview.

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