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Auto lenders focus on consumer behavior

By: Staci Baker

With the shift in the economy, it has become increasingly more difficult to gauge — in advance — what a consumer is going to do when it comes to buying an automobile.  However, there are tools available that allow auto lenders to gain insight into auto loans/leases that were approved but did not book, and for assessing credit risk of their consumers.  By gaining competitive insight and improving  risk management, an auto lender is able to positively impact loan origination strategies by determining the proper loan or lease term, what the finance offer should be and proactively address each unique market and risk segment.

As the economy starts to rebound, the auto industry needs to take a more proactive approach in the way its members acquire business; the days of business-as-usual are gone.  All factors except the length of the loan being the same, if one auto dealer is extending 60-month loans per its norm and the dealer down the road is extending 72-month loans, a consumer may choose the longer loan period to help conserve cash for other items.

This is one scenario for which auto dealers could leverage Experian’s Auto Prospect Intelligence(SM).  By performing a thorough analysis of approved loans that booked with other auto lenders, and their corresponding terms, auto lenders will receive a clear picture of who they are losing their loans to.  This information will allow an organization to compare account terms within specific peer group or institution type (captive/banks/credit union) and address discrepancies by creating more robust pricing structures and enhanced loan terms, which will result in strategic portfolio growth.