If affordability assessments are not yet compulsory in the automotive industry, then why do them? The fact is that such assessments have been shown to provide major benefits for both companies and customers alike.
The concern about affordability assessments is understandable, especially given the highly competitive nature of the industry and the lengthy, complex sales process for high-value vehicles. Dealerships and lenders need to ensure that nothing could potentially interrupt the sales process at the last minute, and that includes extended application processing times, requests for sensitive customer data, or, in the worst-case scenario, customers being turned down for loans.
The truth is that affordability assessments can be extremely beneficial. By selling vehicles and financing agreements that are appropriate and affordable for customers, it’s possible to deliver a more personalised service experience, protect customers against financial stress and increase loyalty and satisfaction.
The question for dealerships and lenders, then, is how to achieve the benefits associated with affordability assessments, while protecting customers and, crucially, the sales process as well.
Protecting customers and sales
When affordability assessments were introduced to the mortgage market, most companies and customers weren’t ready for them – and they received some bad press. But with the right preparation, and the right investments in technology and processes, leading affordability assessment solutions can help to protect customers and sales based on:
- Minimal data capture
Robust affordability assessments can now be completed quickly, without the need for customers to provide a full breakdown of their income and expenditure. Customers’ stated incomes and outgoings can also be verified automatically using data from a bureau derived from UK banks’ Current Account Turnover data (CATO data), increasing accuracy of assessments and saving time for sales teams and customers.
- Fast disposable income calculations
Generic disposable income models are already available to help get the process up and running, and with minimal cost. Disposable income calculations can be cross-referenced and validated against publicly available Office of National Statistics (ONS) expenditure data to ensure that affordability assessments are as accurate as possible.
- Rapid, automated credit decisions
To ensure the application process is as fast and efficient as possible for customers and sales teams, automated decision engines can be used. This kind of technology approves clear cases, and refers borderline cases to an underwriter, who conducts further investigation and makes the final credit decision.
Driving new sales opportunities
So far, we’ve looked at ways to minimise the impact of affordability assessments to protect customers and ensure sales are never jeopardised. The fact is, these assessments can also be used to drive new sales opportunities – especially through online prequalification.
During initial online searches for vehicles and financing options, customers can provide affordability data quickly and conveniently from the privacy of their own homes. They can then browse products with confidence before they visit a showroom with assurance that their loan is likely to be approved.
For sales teams, prequalification reduces the need to harvest customer information in the showroom, reducing the application process to completing a short form. This increases the chance of both winning a quick sale, and of gaining a loyal customer.
Suddenly, affordability assessments are starting to look like an enabler for the automotive sales process; not a road block after all.
To find out more about how affordability assessments can benefit you and your customers, get in touch with the Experian team by emailing firstname.lastname@example.org, download our whitepaper or visit our automotive website.