A tool for boosting dealer profit on online loans
Maheshwari: The experience is broken. The consumer is filling out something that the consumer thinks the dealer should have, but the dealer never sees this finance lead."
How to make a buck when the customer arranges his or her own financing has been a longstanding challenge for F&I managers.
DealerTrack announced last week it is rolling out a tool, called FinanceDriver, designed to get dealerships in the loop when customers apply for financing online.
Dealerships typically don't make much, if anything, on direct loans -- those that consumers arrange for themselves. But dealerships can make hundreds of dollars per car on indirect loans -- those negotiated at the store -- by marking up the interest rate.
DealerTrack plans to help create an in-between category: an indirect loan that customers can obtain online without visiting the dealership. The loan or lease is with one of the indirect lenders that does business with the dealership. The dealership markup is factored into the customer's rate.
Amit Maheshwari, general manager of DealerTrack digital retailing solutions, spoke with Automotive News Special Correspondent Jim Henry.
How does FinanceDriver work?
First, you have to understand how things work today without FinanceDriver. If you look at any of the big sites, AutoTrader or Cars.com, any of those, the consumer goes online and the dealer inventory shows up, and the dealer name shows up. Sites have a button that says, "Want to get financed?"
A form shows up. They fill out that form, and that form may create an e-mail lead for the dealer, or it gets sent in some cases to a direct-financing provider. ... The consumer is unaware of any of this. The consumer is looking at a dealer's car. But the finance lead is with the direct bank or the direct-financing aggregator. The dealer is missing out on that whole financing opportunity.
So customers may show up thinking they're all set only to find out the dealership never heard of them?
The whole experience is what I would call broken. The consumer is filling out something that the consumer thinks the dealer should have, but the dealer never sees this finance lead. How many times has it happened that a customer walks into a dealership thinking they're going to drive out with a car only to be told they can't afford it? It's embarrassing for the customer and inefficient for the dealer.
Can customers get real loans online, or do they simply get prequalified for nonspecific vehicles?
Both functionalities are available. We give the dealer the choice. It's not the portal's choice; it's the dealer's choice. Certain dealers say, "Let's get pre-approval for this customer" because then, if they show up and want some other car, we can still use this same pre-approval for another car.
The full application, we can do that, too. And that one is for a specific car, for a specific amount, for a specific rate.
To produce a quote, don't you need all of the customer's information? How can you do it without knowing the customer's credit score?
You can do it without even knowing the customer's name, if the customer fills out just six fields, based on, for instance, the monthly payment is this much, the down payment is that much, it's a lease or a loan, here are the incentives that are available for that model, for a customer in that [credit score] range; and this is what products the dealer is showing in the showroom today.
So you know the deal structure, such as how big the down payment is.
It's the same as when you walk into any dealership today, using any desking tool. The customer provides the information: "My [credit] score is 750. I do not want to give you my name. It's for a new Corolla. I live in this ZIP code. I'm looking to lease; it's for 60 months. I have $2,000."
What about a trade-in?
We are working on that currently; I can't talk too much about it. The consumer can always look up their Black Book value online and plug in that trade-in value and the payment gets recalculated. We are working on a stronger trade-in product that will be deeply integrated. That is, I would say, a few months away.
How is what you're doing an indirect loan if it's not at the dealership?
It's based on the dealer's lenders, the dealer's incentives and the dealer's markups and all such data that the dealer provides ahead of time.
You can reach Jim Henry at firstname.lastname@example.org.