Artificial intelligence is helping reduce bias from dealers and lenders who might otherwise underestimate or overestimate a borrower's income in the auto finance process. Reducing that bias speeds up deals, lowers risk and matches borrowers with the right type of loans, said Jessica Gonzalez, director of auto lending strategy and account management for Informed.IQ.
AI, widely used by lenders making upfront credit decisions for car buyers, is a relatively new tool for income verification, Gonzalez said. The company, based in Tiburon, Calif., works with seven of the top 10 auto lenders, including Ally and Capital One.
Instead of using AI, some lenders still "stare and compare" income documents to confirm the information dealers submit to them. Gonzalez said using AI to verify income especially helps car buyers who are nervous about walking into a dealership, such as lower-income and thin-file consumers with little credit history .