Consumers have long been able to check their credit and get preapproved for financing through a dealership or lender website, but getting approved on-the-go through mobile devices may become many consumers' first choice when considering an auto loan.
This week, Experian rolled out Text for Credit, a program that allows customers to text a keyword to a short code provided by a credit issuer. The reply text message directs them to a hosted website to apply, review credit offers and receive a decision.
Because the customers use a mobile phone or tablet, in many cases, they won't need to fill out the entire credit application. Some fields will pre-populate based on their device credentials, Experian said. If customers are approved, they will have immediate access to the credit.
"Consumers can find out what they qualify for, before they come to a dealership or a retail store, and that can translate to big sales increases," Alex Lintner, Experian's president of consumer information services, said in a statement.
Consumers and lenders are latching onto the shift to mobile. For example, Volkswagen Credit and Daimler Financial Services invested in mobile lending and finance platform AutoGravity. Since its inception about a year ago, the app has been downloaded nearly 500,000 times.
Nearly a quarter of consumers Experian surveyed said they would consider purchasing a car in the next six months if they could quickly and securely shop credit offers and apply through a mobile device, the company said. Experian conducted the survey of 1,031 consumers from June 28-July 5.
Consumers ranked high-pressure sales tactics as the most stressful part of car-buying. Financing and cost elements made up four of the seven most stressful points of the purchase.
Across industries, a quarter of surveyed consumers said securing credit was one of their top three sources of stress when making a purchase.
Last month, AutoGravity launched two nationwide TV commercials. In one of them, a man shops for and arranges financing on a car in the time it takes a barista to prepare his coffee. In the other, a woman finances and chooses a car in the few minutes she waits for her friends outside a movie theater.
If auto financing and credit approvals can really be that quick and easy on a smartphone, where many consumers are accustomed to doing most of their buying and financing anyway, auto finance companies are wise to be where consumers already are.