Inventor E. Joseph Cossman once quipped that “drive-in banks were established so most of the cars today could see their real owners.” Considering that over 100 million Americans have an auto loan, he might just be onto something. Today, thanks to a scorching hot car market driving up the costs of vehicles, the auto financing sector is booming. With an average loan for a new car totaling $35,392, competition between financial institutions to issue auto loans is fierce. In order to beat out the competition, a growing number of auto loan providers are harnessing Phone-Centric Technology™ to cut down on time it takes to complete the necessary forms, improving customer experience and increasing sales.
The laws of supply and demand are driving up car prices and compelling consumers to take out larger loans. Due to a worldwide shortage of microchips, manufacturers are slowing down or stopping the production of multiple models entirely. With the remaining microchips, manufacturers are building only their more expensive models like SUVs and pickup trucks. To drive prices up even further, consumer demand for vehicles is surging. Despite historical, social, economic, and political uncertainty, Americans, many flush with stimulus cash and extra savings, are eager to purchase cars and hit the road. Because it’s a seller’s market, consumers are paying, on average, 99.9% of the sticker price for new vehicles (which, in years past, would be unheard of). To afford purchasing these more expensive cars with little to no incentives, “Americans are borrowing record sums to buy new vehicles — and used ones — and they continue to pay relatively high interest rates.” As a result, competition between auto loan lenders is intense, and profit margins are high.
Americans have two primary choices when financing their car: direct and indirect financing. Direct financing is when a consumer goes to their bank or credit union to apply for a car loan before purchasing a car at the dealership. Alternatively, indirect financing is when a consumer selects the vehicle and finances it concurrently at the dealership. The car salesperson is responsible for running a credit check. Whether consumers choose direct or indirect financing, they should shop around for their best option and expect some serious paperwork. Applying for a loan is a fairly laborious process which is why lenders are investing big in technology to accelerate form-filling and cut down on user errors.
While there may be no better feeling than getting the keys to your dream car, filling out the forms necessary to finance a car is a major pain point, either in person or online. However, believe it or not, there’s a good reason for all that paperwork. In order to ensure that a customer can pay back their loan, financial institutions require stips (industry shorthand for stipulations) like proof of income. After providing copies of their stips, a customer fills out their CIP (Customer Identification Program) forms. CIP forms were created under the Patriot Act to make it more difficult for criminals to use car purchases as a tool to launder money and fund terrorism. The CIP check requires customers to provide similar information (customer name, date of birth, address, and tax identification number) as the stip check, which inevitably leads to customer frustration. In addition, with so many repetitive forms to complete, customers are prone to making errors which can lead to increased processing time on the part of lenders and higher rates of rejection for customers. Fortunately, Prove Pre-Fill™ is one powerful way financial institutions improve customer experience by drastically cutting down on the time it takes for a customer to fill out their CIP and stips while reducing fraud and improving compliance.
Already popular in the banking industry, Prove Pre-Fill accelerated onboarding by turning it on its head. In a typical onboarding flow, the consumer fills out forms, and then the onboarding system verifies the information using an authoritative source. Prove Pre-Fill™ harnesses the power of Phone-Centric Technology to autofill forms using an authoritative source and then asks the consumer to simply confirm the answers. This new and improved flow drastically reduces both user errors and drop-out rates caused by typing fatigue while reducing fraud by preventing consumers from impersonating someone else.
Without Prove Pre-Fill, the average time it takes to fill out a five-line application (industry speak for the auto loan application) is 40 minutes. This is a major pain point for customers eager to get on with their busy lives. With Prove Pre-Fill, a five-line application can be completed in just a few minutes. Cutting down on a customer’s time spent filling out forms is especially critical for car dealers because it allows salespeople to get back to the floor faster while improving customer experience, a critical benchmark for the all-important J.D. Power Awards. It can even be used outside of the lending flow to verify a customer's license before approving test drives during the beginning of the sales process. In order to beat out the competition, auto lenders must accelerate the authentication process, reduce drop-out rates, and improve customer experience.
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