Trust is rarely more important to a relationship than when you’re asking someone to part with their own money. Yet the effort required to build that trust can be almost as much work as a prospective car buyer has put in to generate their hard-earned cash in the first place.
Nobody wants to feel like the wool is being pulled over their eyes, so transparency is vital to empowering people. The challenge is to portray this consistently across all channels used for car buying, including your online presence, increasingly used when your dealerships are closed.
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So, how do you tackle the delicate subject of finance in an online journey? A false move here can create the wrong level of expectation and disengage customers. Worse still, you could fall foul of regulations.
Other market sectors which encounter similar challenges increasingly use credit pre-qualification checks as the solution. Most commonly used for credit card and personal loan applications, the service allows people to check the likelihood they will be accepted for finance with a ‘soft search’, which doesn’t leave a hard record on their credit file or affect their credit score. Card and loan providers find this avoids the issue of people seeing a great offer, only to apply and experience the disappointment of being rejected after a full
credit search has been performed.
Along with being a familiar part of the journey to people applying for cards and loans, the price comparison websites regularly used by people rely upon it as an integral part of the search process. Pre-qualification checks are a natural fit in motor finance where people typically put in a great deal of research before carefully making a selection. Once people know what finance they are likely to obtain, it will manage their expectations and help ensure that further research and road tests are based on the car they can realistically purchase.
It’s something we have been working on with HD Decisions, a provider of data and technology products for the financial services market, including pre-qualification solutions, recognising the importance of the quality of data and lender relationships to ensure the best outcomes for people.
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By GlobalDataWe have been looking at how to improve processes in the automotive sector. But current practices are well entrenched and, though it seems inevitable, it will take time to adopt a different customer journey.
It’s also interesting to see how people conduct their purchase journey – a survey we conducted last year found more than half of people begin their search online. The start point is often led by a brand choice, a budget or a lifestyle requirement that the vehicle needs to meet. This can then progress through manufacturer or dealer websites, finance companies and lenders, or online and physical magazines, to name a few.
Deployed correctly and in the right context, the credit pre-qualification check can guide people on how much they can afford to spend on a car before browsing, or let them know if they are able to buy the vehicle they want. Motor traders that introduce pre-qualification checks can help people make an informed choice and manage expectations that are more likely to create a good outcome.
Andrew Ballard is principal consultant at Experian Automotive
