|For most people, the largest purchases made in a lifetime are houses and automobiles. If someone is serious about buying a house, the seller and realtor expect to have qualification information to ensure that the buyer can obtain a sufficient loan. This saves tremendous time and effort for everyone involved in a real estate transaction – from the buyer and lender, to the seller and sales agent. Now, new software offers similar benefits in the automotive arena.|
Tailored software packages have been developed to create a “win-win-win” purchasing scenario for dealerships, lending institutions and customers of pre-owned vehicles. The software is designed to help dealerships maximize profitability, help customers identify and purchase the best car or truck within their budget, and facilitate on-target loan decisions by lending institutions.
Such software systems now provide dealerships with lending valuation criteria. Integrating valuation with dealership data reveals how much customers in each rating class can borrow from lending institutions while a vehicle is being appraised. The software thereby assists dealership personnel with the appraisal process by ensuring that a particular vehicle can be financed – and at what loan amount – for a particular consumer. Additionally, dealerships can quickly determine which vehicles are best to obtain, as well as which to avoid adding to their inventory of pre-owned vehicles. This significantly increases the efficiency of the dealer’s special finance operation and ensures that all elements come together to help gain new customers.
These new software programs integrate with NADA, Black Book, KBB and other valuation databases to enable dealers to identify which cars and trucks on their lot are priced below the value that lenders will finance. This way, when dealers approach credit-challenged customers, they can identify only those vehicles that the customer can afford and still allow the dealership to make a profit. Without this information, dealers and customers waste time looking at vehicles the customer can’t finance, creating frustration for everyone involved.
New software packages also allow dealers to obtain a water report with the click of a mouse. Knowing that the price a dealer has for a vehicle aligns with book list values, significantly bolsters a customer’s confidence in the dealership’s credibility.
Dealers who do not have tools like this can be put through an agonizing process of having their sales representatives walking a lot, selecting vehicles for which customers cannot qualify. This process costs dealers time, effort and money and leads to low morale and lots of frustration. Plus, the situation can be exacerbated if the dealer is not set up to handle sub-prime customers.
As part of the inventory book difference report, which the software instantly generates, dealers can quickly inform customers which vehicles they can acquire, based on their current financial and trade-in situation. From the dealer’s perspective, the software is a big advantage in that it factors in the need for the dealership to make a profit, while still making the transaction a good business decision for the customer. In cases where the customer is in a negative-equity position, it allows the dealer to help the customer find the best vehicle to absorb that negative equity.
This process saves time and effort by enabling dealership personnel to show the customer only those vehicles he or she can finance, while ensuring that the purchase is the most efficient in terms of financial commitment.
One of the primary advantages the software provides to banks is an accurate, streamlined process for storage and delivery of book information. Book out sheets are created by the system and inserted into deal jackets to document a vehicle’s valuation at the time of trade.
Additional benefits are inherent in the advantages provided to dealers and customers. When a dealer is already “in the know” about how much a bank is willing to finance on a particular vehicle at the time of appraisal, the process goes that much faster and smoother. Contemporary software also gives dealers information on what a potential customer’s credit score needs to be to qualify for a loan, further facilitating the process for all involved.
The lesson learned? Technology within the automotive industry continues to evolve at a rapid pace. Innovative software helps dealers stay one step ahead, while making appraisal and purchasing transactions faster and easier for customers and banks alike.
Vol 2, Issue 9
KAR Auction Services has consolidated its Recovery Database Network management team following the company’s acquisition of Clearplan.