Customer Retention, Quick Funding Are Key to Staying Ahead

canstockphoto10268477While it’s probably overly pessimistic to say that a “perfect storm” is brewing in auto finance, it is true that some lenders are under increasing pressure on a variety of fronts, including higher loan losses from looser underwriting, plateauing car sales, the possibility of higher interest rates, and lower prices for used vehicles.

To keep revenues — and profits — growing in this environment, lenders are putting a variety of strategies into action. Many are taking steps to deepen their relationships with their existing dealers, but Skokie, Ill.-based Turner Acceptance Corp. is going one step further. The lender — who only works with independent use-car dealers — is helping its dealers deepen relationships with retail customers, said Andres Huertas, Turner’s director of direct and merchant lending.

“One of the things we do to differentiate ourselves is we work really hard to ensure that dealers keep their customers,” Huertas told AFN. “One of the most important assets a used-car dealership can have is their loyal customer base. Since independent dealers don’t have the budgets or the infrastructure for customer acquisition, they need to find partners that help them retain their customers.”

Most indirect finance companies don’t pay attention to customer retention because their only focus is on the current transaction, he added. “We do marketing campaigns in conjunction with the dealers, such as preapprovals,” he explained. “When the customer finishes paying off their loan, we refer them back to the dealer so they can upgrade.”

Another thing that Turner has focused on, that its competitors largely ignore, is speed of funding, Huertas said. “We’ve seen that the industry has been focusing on speed to decision, while the speed to funding has not changed much,” he said. “But it really doesn’t matter if you make your [credit] decision in 30 seconds instead of 30 minutes if you are unable to deliver the funds. A lot of technology systems are focused on expediting the decision, but we are able to expedite the funding of the deals.

Additionally, by catering to small dealerships, Turner is able to stay ahead of the competition because it has a more personal and intimate knowledge of what those dealers want, Huertas said. For many of its dealer clients, Turner acts as their “de facto F&I department” since some don’t have their own finance manager, Huertas said. They don’t get that treatment from larger lenders, who are more focused on automating the lending process.

“We view technology as a way to enhance the relationship with dealers but not replacing the way we relate to them,” Huertas said. “Many finance companies are becoming too system-centered but they’re not becoming customer-centered. They assume things that dealers want but they are not taking the time to ask the dealer what they want and expect. Listening to what the dealers want and understanding the bottlenecks in the lending process has been one of our top priorities this year.”

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