90% of Auto Dealers/Lenders Link AI-based Pricing to Inaccurate Quotes

Adding further challenge is the fact that over half of lenders and dealers report that payment terms are negotiated with the online customer before a lender decision. “Talk about putting the cart before the horse,” said MacInnis. “Negotiating payment terms before a lender decision is a recipe for consumer dissatisfaction and deal rewinds.”  In fact, over 70% of respondents agree that having finance involved in the deal flow prior to the first pencil, digitally or otherwise, would improve the process for all parties.

Key Survey Takeaways

• 86% of respondents think inaccurate online digital retailing payment quotes have an adverse impact on buying experiences. (89% Dealers/84% of Lenders).
• 90% of respondents say that AI based pricing at the customer qualification level (rather than legacy credit tier band pricing}, is contributing to inaccurate online payment quotes. (91% Dealer/85% Lenders)
• The Digital Retailing term “Penny Perfect Payments” means “payments tied to jurisdiction sales tax, license and registration fees,” for 57% overall. Only 43% said “payments tied to jurisdiction sales tax, license and registration fees,” PLUS actual customer pre-qualified to a specific lender decision.” Lenders were more likely to say the latter (52%) than Dealers (42%)
• ‘Customer-provided credit score estimate’ is the feature that most commonly powers initial online digital retailing payment quotes, according to 64% of respondents; ‘actual FICO scores’ (17%), and ‘basic calculator tools’ (15%) lagged far behind, with ‘actual lender decisions’ dead last at 4%.
• Initial digital retail payment quotes match final lender decisions less than half the time say 96% of respondents, with 76% saying they match less than 25% of the time. (74% Dealers/79% Lenders)
• 87% overall agree that has there been a reduction in Lenders providing rate-sheet pricing bulletins (89% Dealers/83% Lenders)
• Lender loan pricing models are predominantly driven by ‘credit score plus other credit attributes and advance guidelines’ say 66% of Dealers and 57% of Lenders.
• 54% overall say that payment terms are negotiated with the online customer before the Lender decision.
• The desked deal matches final lender decisions less than 50% of the time say 72% of respondents.
• 74% agree that having finance involved in the deal flow prior to the first pencil, digitally or otherwise, would improve the process for all parties, with Dealers indexing higher (78%) on this than Lenders (69%)
• 94% overall say that pre-desking technology, integrated with lender proprietary credit scorecard models, would improve the car buying/selling experience for all parties. (94% Dealer/92% Lender).

To download the eLEND Solutions’ survey report: Bridging the Trust Gap: The Quest for Transparency in Retail Automotive, click here.