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FINANCE

Instant Income Verification Could Improve

Sales Process for Consumers

BY JOHN GIAMALVO, VICE PRESIDENT-DEALER SERVICES, EQUIFAX

This year could see U.S. auto sales de- Instant verifications used in the early Utilizing payroll data from a third-party
cline for the first time since the industry stages of the loan process can give dealers database can help dealers identify situa-
emerged from the 2009 recession, mean- a clearer picture of their customer’s abili- tions when a customer misstates his or
ing automotive lenders and dealers no ty to make payments. The dealer also can her income. In such cases, dealers more
longer can rely solely on record vehicle use verifications to confirm if the con- often find an individual has understated,
sales month after month to grow their sumer qualifies for an employee-pricing rather than inflated, his or her income
businesses. program through his employer’s benefits on a loan application. Equifax research
package. found only 15% of applicants overstate
This lack of increasing demand could their incomes. With instant income ver-
present a challenge as consumers spend Manually verifying ifications, dealers can identify instances
less time in the dealership before purchas- when a customer under-reports his or her
ing a car. In fact, the average car buyer employment and wages and therefore may qualify for bet-
spends 60% of his total purchase process ter financing terms.
online, as reported by Cox Automotive in income may slow
its 2017 Car Buyer Journey Study. Another attribute that is verifiable
down or even through third-party payroll databases is
So how do brick-and-mortar dealer- derail the car-buying job tenure, which can be highly indicative
ships adapt to remain competitive in this of an applicant’s repayment risk. In fact,
changing marketplace? One way is to process. consumers whose job tenure is one year
make the car-buying process as efficient or less are almost twice as likely to go de-
as possible for the consumer. linquent on an auto loan compared with
Instant verifications provide access to consumers who have job tenure of 10 or
To facilitate this efficiency, dealers should employer-reported payroll data that in- more years.
consider a best practice one of their lend- cludes information such as active or in-
ing partners might use, such as leverag- active employment status, length of time Verifications of employment also can
ing instant income and employment ver- employed and income level (including provide insight into whether a consum-
ifications. wages, bonuses and commissions). In ad- er recently has terminated employment
dition to being readily available at a mo- with a particular employer or switched
Manually verifying employment and in- ment’s notice, the verification database employers – details that would not be re-
come may slow down or even derail the frequently is updated directly by employ- flected on a pay stub. Combining an ap-
car-buying process. It can take days to ers as payroll information is brought up plicant’s up-to-date employment history
track down and contact a customer’s em- to date. with corresponding income information
ployer to verify the information provided provides the visibility a dealer needs to
on an application. By obtaining an instant verification at the evaluate a consumer’s propensity to repay
point of application, dealers have the in- vehicle loans at a particular amount.
While the dealership conducts its due formation they need in a matter of sec-
diligence to determine whether a poten- onds to quickly and confidently make a Lenders already are benefiting from hav-
tial customer has the income and assets determination regarding a consumer’s ing instant access to this level of data
to repay a vehicle loan, there is a risk the ability to pay. Rather than relying on and insight, and dealers now have the
customer may lose interest or find a dif- credit scores alone, dealers can use these opportunity to incorporate income and
ferent vehicle from a competitor instead. services to confirm income levels, pay employment verifications into their own
One way to speed up the process is for the frequency and job tenure – attributes that workflows, allowing them to create a
dealer to obtain instant verification of an provide an extra level of analysis for iden- more efficient car-buying process for both
applicant’s employment-related financial tifying or mitigating risk. their customers and their businesses. n
resources from a third-party service.

30 | GIADA Independent Auto Dealer JUNE 2017