A recent FLA report revealed that 84.3% of new car sales in the UK are bought on finance, so it’s no surprise that the sector is flourishing. Graham Donald, MD at Equiniti Pancredit, explains how electronic signatures are transforming the customer experience at both new and used dealerships.
Figures published in August by the Finance & Leasing Association (FLA) showed that point-of sale new business in the consumer new car finance market has grown by 9% in value and 5% in volume, compared with the same month last year.
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Used car finance sales are also on the up, reporting growth of 23% in value and 21% in volume over the same period. Clearly, that ‘special something’ that we all feel when buying a car has kept the market buoyant, despite economic uncertainties and the implementation of stricter FCA regulations.
Dealers will be the first to say that the purchasing thrill felt by a customer can be short-lived, and the longer they are kept apart from their new wheels, the greater the likelihood that they will pull out of the deal. Research published earlier this year in the UK found that 48% of Brits found securing finance the most difficult part of buying a car. And a huge 32% were put off making a purchase for fear of lengthy finance processes.
The figures will not come as a great surprise; the finance application process remains arduous, despite the introduction of intelligent technology designed to speed things up.
Most dealerships have at least graduated to capturing finance application data electronically. The most advanced of these are also using intelligent cloud-based systems to verify the customer’s finance eligibility prior to the application being made, to maximise the likelihood of a positive result.
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By GlobalDataThe problem is that until recently the final finance application has required a paper-based signature of authorisation from the customer. This, regardless of the smart automated technologies employed by dealerships and lenders, typically causes delays of a couple of days (while physical documents are exchanged) before a final decision can be reached.
This period not only creates admin headaches for both lender and dealer, it affects sales too. The moment the customer leaves the dealership empty handed, the chances of the sale being finalised plummet.
Fortunately, all this is changing. The dawn of electronic signatures is now enabling the whole finance application process to be conducted electronically, enabling dealerships to obtain finance decisions from lenders within minutes, not days.
Crucially this means that the sale can be closed and the customer handed the keys on the same day, dramatically increasing customer satisfaction and helping dealers close sales while the customer remains both excited and enthusiastic.
The adoption of electronic signature technology is the last hurdle for dealers to overcome before the whole application process can be brought online. Enabling a fully end-to-end digital finance application process also ticks boxes for the sector’s regulator, the Financial Conduct Authority, which is focused on driving greater transparency, efficiency and achieving consistency in the underwriting process.
All dealerships will be keen to make the most of today’s rising market, and anyone who has bought a car recently will know that they design the sales process extremely carefully. Ironing out key points of friction in this process will enable dealers finally to overcome a barrier-to-sale which they have wrestled with for years.
The question now is: which dealerships have the vision to gain the early-mover advantage?
