The Essential Digital Credit & Finance Checklist for Automotive Digital Retailing
As dealers continue adapting to evolving customer expectations and the digitized car buying journey, the path to embracing a comprehensive digital retailing (DR) solution can seem complex and fraught with potential pitfalls.
In its purest form, DR offers a comprehensive solution, enabling customers to self-direct their car buying process online. The entire transaction sequence, from browsing to contracting and delivery is smooth and seamless, allowing dealers to meet the rising demand for digital convenience.
However, finding the right technology to power the entire transaction online is a formidable challenge. With over 13,500 makes and models and countless trim, color, and option combinations, the elements of a transaction are diverse. Adding to the complexity are regulatory hurdles, including federal and state advertising laws, franchise rules, and brand compliance requirements.
With these complexities, it’s essential to have the right technology powering your dealership’s online transactions. The real value of a digital retailing solution lies in its capacity to handle the transaction from start to ‘relative’ finish, including credit decisioning, fundable payment quoting, deal structuring – and lender matching. Anything less, and you’re merely looking at an advanced lead generation tool.
With the abundance of options available, how do you ensure you choose the combination of technologies that will enhance your dealership’s efficiency, customer satisfaction, and profitability? The checklists outlined below are designed to address the complexities and nuances when considering digital credit & finance solutions for your automotive digital retailing strategy.
While not exhaustive, they offer a comprehensive overview of the essential items that should be on your radar. My hope is that by using these checklists, you can evaluate prospective solutions and ensure your digital retailing strategy aligns with your dealership’s needs.
Digital Credit Checklist
- Integrations: How seamlessly does the credit or DR platform integrate with your existing third-party tools? This is huge! Consider factors such as compatibility with your CRM, website, inventory provider, finance platforms and others. Your digital solution should not be an island, but a bridge connecting various aspects of your business. Don’t forget to account for the cost of integration; hidden charges can quickly add up.
- Ease of Use: Is the DR solution user-friendly for both your customers and your staff? A platform that is straightforward and intuitive can significantly enhance the car buying experience, positively impacting sales and productivity.
- Effective Calls-to-Action (CTAs): Are the CTAs compelling and visible enough to capture buyer attention? And does the credit pre-approval process initiate with a single click from the Vehicle Detail Page (VDP)? The answer to this will determine user engagement and conversion rates.
- Configurability: The platform should be flexible enough to be configured for pre-screen, pre-qualification and/or traditional hard credit pulls. Does it provide instant credit decisions based on dealer-defined credit criteria? This expedites the purchase process and is a trust builder with consumers. Bottom line, you should be in control of your credit application and credit filters, with the ability to modify them according to your dealership’s requirements.
- Lender Submission: Does the credit solution have the capacity to submit a credit application to a lender? This functionality is vital in ensuring a efficient buying process that keeps the shopper engaged and satisfied.
- Lender Base: It’s essential that the credit solution works with your existing lenders, and has options to add more, if needed. Ideally without any hidden fees. Access to a broad lender base enhances your ability to provide a diverse range of credit options to your customers.
- Interactivity: Does the credit solution allow for interaction during the sales process? Integrated messaging or chat features can gently guide customers through the process, allowing for a more collaborative and personalized buying experience. Your goal is to help them buy the car.
- Customer Re-access. Does the credit solution allow customers to re-access their information upload any required documentation? (i.e. bank information, employment/income verifications, proof of insurance, etc.) We believe anything that creates buyer conveniences and accelerates the transaction is positive.
- Compliance. Is the credit solution in compliance with the new FTC Safeguard Rules? For obvious reasons, you should unquestionably trust in the protection of your customers data. Encryption at the system database level and multi-factor authentication access rights at the rooftop and group level are just two examples. Protection of your customers’ data is non-negotiable. You know what has to be done.
Digital Finance Checklist
- Versatility. Can the digital finance solution structure all deal types (i.e., loans, leases, and balloon notes)? And handle all credit tiers? And all year, make, model, trim, option combinations? Why is this important? Because every customer is unique, and so is their credit situation. And so is the transaction. There can be hundreds of data points that impact the final terms of a deal. Each vehicle can have different mileage, term, advance guidelines before you even consider the customer qualifications. Only a ‘yes’ ensures that no matter what vehicle a customer is interested in, the platform can handle the transaction. We believe that the best solutions should handle it all.
- OEM Compatibility: Does the solution work with your Original Equipment Manufacturers’ captive? Compatibility is essential for efficient and accurate transaction processing. And is crucial to prevent unnecessary hurdles in the implementation process.
- F & I Menu System: A DR platform with an integrated F & I menu system is not only essential for legal compliance but also aids in keeping the transaction process transparent and streamlined. If the platform lacks an F & I menu system, it may not be the right choice.
- Credit Repository Certifications: Is the DR or finance platform certified from a security compliance standpoint by the credit repositories? Why is this important? Without that compliance certification, the vendor will not have access to the raw credit report data required to match a customer’s qualifications to lenders’ pricing, underwriting, and advance guidelines. If they say no, and your goal is to quote fundable payment terms, the conversation is over.
- A calculator is not enough: Does the DR solution have access to the raw credit report data & the technology to parse it out? Why is this important? FICO score alone is not nearly enough to determine credit eligibility and loan pricing. A ‘calculator’ isn’t enough either. The right platform needs to have the rules and logic-based AI that will enable the technology to go deeper than just a credit score and, for example, be able to calculate debt-to- income (DTI) and loan-to-value (LTV) ratios. These ‘other’ factors effect whether deals get loan approval or not.
- Lender Matching: Can the DR solution match the customer and the car with the right deal structure – matched to qualifying lender programs rates, terms, payments, advances with a fundable deal? This really is the bottom line for any vendor claiming to offer a complete digital finance technology solution. If any part of that equation is missing, so is the deal. A successful digital finance technology solution should optimize all parts of this equation.
- The Real Deal: Can the DR solution provide a vehicle and credit qualified payment and fundable deal structure matched to your actual lenders’ programs (including pricing, underwriting and loan advance guidelines) + all applicable taxes + dealer specific fee structure + and all levels of dealer participation? Without this data, you are calculating A payment, but not THE payment for your customer – leading to confusion and unavoidable friction when the “deal” cannot be contracted.
- E-contracting: Does the finance platform support e-contracting? A seamless sales process is greatly facilitated by e-contracting capabilities.
- Compliance Beyond F & I: Does the solution comply with all necessary regulations, such as the Home Solicitation Sales Act, the Buyer’s Order, Retail Installment Sales Contract (RISC), taxes, Lease Agreements, and more? As you know, this is VERY important!
If you’re merely looking for a ‘super lead’, a lead gen tool with a few extra features might suffice. However, if your aim is to truly sell the car, your DR solution must be capable of processing a sale from start to a transactable, fundable deal. This includes real-time credit decisioning, fundable payment quoting, lender matching, and more. Otherwise, both you and your customer may end up disappointed.
Remember, the goal is not just to adopt a new technology for the sake of modernization, but to streamline your sales process, enhance the customer experience, and ultimately, drive more sales.
The perfect digital retail solution isn’t one-size-fits-all. These lists should be tailored to your dealership’s specific needs and the unique circumstances of your marketplace. You are not just picking a digital retail solution; you’re paving the road to an efficient, customer-centric, and profitable future.
Pete brings over 40+ years of experience in automotive finance and technology as Founder and CEO of eLEND Solutions™. Founded in 2003 as DealerCentric®, Pete is leading the company’s evolution to an automotive FinTech platform focused on deal generation solutions that power transactional digital buying experiences for the retail automotive industry.
The platform specializes in hybrid digital credit, identity, and finance solutions - designed to accelerate conversions of digital end-to-end purchase experiences - concluding with a transactional, fundable deal structure.