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Vehicles Hard to Get, But Auto Financing Isn’t

BY STEVE FINLAY, RETIRED WARDSAUTO SENIOR EDITOR

Automotive consumers currently may basically a ‘grid’ and eliminates the need to enough information for me to give.’”
struggle to find the vehicle they want at a resubmit loan applications” if the original Another trend Mayers notes is the overall
decent price amid an inventory shortage. submission requires amending. increased popularity of digital auto retailing.
But obtaining auto financing is a cinch today It gained traction during the height of the
for most people. “If someone changes terms, COVID pandemic.
you don’t have to refile,” he
“Availability of funds is higher now,” Cox Automotive says its data indicates
says Andy Mayers, whose duties at Cox says. “That benefits dealers who offer flexible digital experiences
Automotive include serving as the company’s everyone – the consumer,
lender solutions strategist. “It’s easier for dealer and lender.” are five times more likely to get a shopper’s
people to get credit.” lead submission, experience a 46% higher
close rate than from other lead sources,
That’s somewhat mollifying for today’s in- Another digital trend Mayers cites: Online and earn 24% higher gross profit per deal.
market car consumers who face an inventory auto shoppers now can readily upload and Consumer satisfaction with car buying has
dearth caused by a global microchip send so-called loan stipulations such as a increased with digitization, reaching an all-
shortage. It has resulted in automakers driver’s license, proof of employment and time high of 72% in 2021, up from 60% in
cutting production and dealers raising prices W-2 forms. 2019, according to a Cox Automotive study.
as demand outpaces supply.

“The higher prices haven’t
affected the availability
of credit,” Mayers tells
WardsAuto.

Because the product shortage has hampered
vehicle sales, there are fewer auto loans these
days. But the amount of money lent typically
is higher than before, “a $43,000 loan vs. a
$34,000 loan,” Mayers cites as an example.
It’s not particularly hard to forge a pay stub, Most auto consumers follow a hybrid
The scarcity of dealer lot stock has hit but technology allows lenders to better verify
automakers’ financing arms more than other approach that consists of both online
lenders. “It’s been a negative for the captives,” stipulation information such as income. shopping and in-store visits.
Mayers says. Credit unions, on the other
hand, “are capturing more business.” “Say that someone applying for a loan is But Mayers foresees a day when A-to-Z
a truck driver living in a particular area,” online auto buying, including digital
His work entails tracking lending trends, Mayers says. “The technology can match contracting, becomes commonplace. He
particularly as technology plays a greater role the demographics, such as job-related notes several Cox Automotive units, such as
in the credit-driven automotive marketplace. income levels for people living in specific Dealertrack, are working toward that.
geographical areas.”
For instance, technology now allows It includes what he calls a “lights-out”
lenders to respond to a credit application When applying for auto loans, some people lending process. “That means everything is
by providing a “menu” of term options exaggerate their income and job titles to
depending on different deal structure enhance the chances of credit approval. The in order and all the work is done when the
scenarios, such as down payment amount auto-financing world is full of stories about contract package is received.”
and loan-to-value, or how much money a that, such as a cook claiming to be a chef.
car buyer wants advanced in relation to the Comparing complete digital auto retailing
price of the vehicle. But conversely, many consumers tend to and lending to autonomous-vehicle
under-report their earnings, especially development, he says, “We’re not at level 5
“Lenders now have the ability to return if they are in higher income brackets, yet,” the industry-designated point at which
multiple decisions,” Mayers says. “It’s Mayers says. “Their thinking is, ‘That’s a vehicle totally drives itself. n

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