Auto Loan Origination – Is the Dealer Still King?

Author: Chris Martin

Software, and technology as a whole are transforming the auto finance channel.

Historically, the auto dealer sat on the throne, orchestrating the buyer’s journey from a position of prominence and visibility. Dealer incentives lured buyers into dealerships to enjoy stale coffee, mull over sticker price, and leave the dealership praising the new car smell. Trade-ins and financing happened without hesitation, a mere formality within the car buying experience.

The wheel turned, and we turned with it.

A Position of Power in Auto Financing

Information, as it does, illuminated the process. So, as automotive buyers themselves became more informed, the status quo came into question.

A survey from reveals that people would rather do taxes or sit in an airplane’s middle seat than subject themselves to the automobile purchasing process. Ouch.

There’s a scene in Game of Thrones’ Season 2 where Lord Petyr “Littlefinger” Baelish (Master of Coin) and Cersei Lannister (Queen-regent) hold a conversation through the echoing halls of Kings Landing. The tension weighs heavy as personal shots are dealt, but ultimately peaks when Baelish reveals his knowledge of Cersei Lannister’s most shameful secret. He asserts his blow with the cliche, “Knowledge is power.” Cersei counters with a display of force, commanding her bodyguard to seize Baelish and execute him, before ultimately calling them off. “Power is power,” she ends.

This dance mimics the melodrama of the auto lending scene, the tug-of-war between buyer and seller to hold the upper hand in the notoriously gut-wrenching experience that is car buying. Consumers are fueled by access to information and are poking at power. And, if Game of Thrones has taught us anything it’s that opportunity awakens when the proverbial wheel starts to falter.

The Future of Auto Finance

Those who spend their lives gazing into the future of finance have described its characteristics. It’s a curious place devoid of human interaction, where every car buying transaction will be commanded from behind the screen of a smart phone.

However, the genuine and present opportunity in F&I comes as the channel blossoms.

  • Direct lending has come so far from laughable that it is commonplace, and competitive.
  • Aggregators are playing both sides of the coin, leaning on price for the benefit of the buyer while facilitating the cumbersome legwork on behalf of the dealer.
  • Online upstarts are popping up on every digital corner, serving customers who prefer to avoid the in-dealership experience.
  • Brands are inching their way into the game to test the direct to consumer waters.

One thing remains constant; each of these channels is (or should be) brandishing technology for the mutual benefit of the business and the customer. Listed alongside the fully online buying experience, futurists and trend spotters are calling out the importance of relationships in the longevity of the lending business. Paradoxical as it seems, a successful implementation of auto lending software should do just that – build convenience, speed, and trust into the F&I saga.

As for the throne? We know this story does not end in utopian harmony and we are likely to see the auto financing melee continue for a good, long while. After all, with all of this fuss to win the buyers’ attention, one starts to think that the customer has been wearing the crown this whole time.


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