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Better Lenders Book a Higher Percentage of their Applications
New survey from JD Powers and Associates shows automotive lenders who satisfy their dealers are more likely to book a greater portion of preferred loan applications from their dealer network
Satisfied dealers give their best lenders more business
Here at Auto Credit Express, we have experienced first-hand the results of the findings of the latest J.D. Powers and Associates report: as a dealer, the better a lender treats you and communicates with you, the more likely you, as a dealer, will be to steer the best of your finance business to them.
“The study finds that within the prime retail credit segment, lenders with a highly satisfied dealer network (scores of 901 or higher on a 1,000-point scale) successfully book a higher portion of applications they review–55 percent, compared with 25 percent among dealers with low satisfaction (scores of 700 or lower). Similarly, lenders with highly satisfied dealers also close a greater percentage of the loans they approve (77% vs. 46% among low-satisfaction dealers). As a result, lenders delivering higher satisfaction are spending less on processing new loans and also enjoying higher risk-adjusted returns.”
“In addition, highly satisfied dealers send more of their current business (40 percent) to lenders that deliver a satisfying experience. In comparison, dealers with low levels of satisfaction send just 20 percent of business to their lenders. Highly satisfied dealers are also more likely to send a greater proportion of business to their lender in the future. Sixty percent of highly satisfied dealers say they “definitely will” increase the percentage of business sent to the lender, while just 12 percent of dealers with low satisfaction say the same.”
The study found that there are three key objectives that lenders need to meet in order to satisfy their dealers:
1) Establish proactive and ongoing lines of communication
2) Improve speed and flexibility of approval and funding process
3) Provide satisfying interactions with dealers
The study also revealed that while dealers have always had strong ties to their captive lenders, the recent challenges in the economy caused many dealers to establish stronger ties to banks that stepped in and filled the void when captives cut back on lending.
The Bottom Line
Most of us here have experienced the frustration of dealing with a lender that is uncommunicative, unresponsive to our needs and slow to fund deals – especially when times are difficult. What is even more surprising is that many of these same lenders, when times are good, can’t understand why we won’t send them more business.
To quote from the report:
“As the market shows signs of recovery, those lenders that have continued to focus on communication–specifically about process changes that have been implemented as a result of recent economic challenges–and building strong relationships with their dealer network have more effectively managed dealer expectations,” said Paul A. Cuevas, director of automotive finance at J.D. Power and Associates. “In doing so, these lenders have positioned themselves to be the lender of choice and capture more business.”
Enough said.