Black Horse pilots new risk-based PoS tool

On November 1 Black
Horse Motor Finance launched a pilot scheme to test AutoRate
Plus, its new point-of-sale (PoS) tool.

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Nigel
Williams, senior planning manager at Black Horse told Motor
Finance that the aim is to adopt a brand new approach to
selling finance at the PoS. He said: “It has been apparent for some
time that the environment in which PoS finance has prospered in the
past has changed to the point where relatively radical solutions
are required to revive its prospects.”

The changes at Black Horse come at a time when many in the UK
motor lending industry, including the Finance
& Leasing Association, are calling for new thinking to be
adopted in order to continue selling finance and insurance in
dealerships.

Dealers participating in AutoRate Plus have accepted a
willingness to embrace the changes necessary to compete on a level
playing field with direct lenders. Williams explained: “They have
also agreed the potential for higher acceptance rates and earning
more finance and insurance profit. This in turn will lead to a
greater opportunity for more repeat finance business as customers
receive the right rate for them.”

AutoRate Plus in many ways replicates the direct lenders’ method
of operating – offering the best rates for the most credit-worthy
customers. Dealers pass proposals to Black Horse where, following a
credit assessment taking only moments, they are swiftly notified of
the appropriate rate for the agreement. The agreed rate can contain
a pre-arranged element of dealer commission.

Implementation of AutoRate Plus follows a period of initial
pre-piloting and a series of regional dealer forums where,
according to Williams, a “very positive reaction to the plan was
received”.

He added: “Adopting a risk-based pricing approach, whereby we
underwrite on individual customer profiles instead of solely on the
age of vehicles, will offer dealers much more flexibility to submit
proposals for all their customers. They will ultimately make more
profit in the longer term.”

A full formal research programme is to be introduced during the
pilot with the aim of fine-tuning the whole approach for the full
launch. Depending on the success of the pilot and the lessons
learned from the research the full roll out is expected during
2008.