As payment-minded millennials flood into dealerships across the country, leasing’s popularity is on the rise. But completing those deals remains a complicated task. So where’s the automation?
Last time I checked, car loan terms were pushing 84 months. I don’t know any millennials who plan to keep their cars for seven years. Nor do I know any dealer who wants them to stay out of the market for that long.
For those reasons and more, it’s easy to understand why leasing has seen a resurgence. It offers everything today’s consumer demands: flexibility, lower payments, and fewer concerns about negative equity. Of course, leasing also offers tremendous benefits for dealers:
• Better customer experience: With vehicle costs and payments on the rise, a lease lets drivers put down less money upfront, make much lower monthly payments, and avoid the long-term commitment of a 72- or 84-month auto loan.
• More repeat customers: An inherent benefit of auto leasing is that your customer will, at some point, make contact again with your dealership. When their lease is up, and they return the car, you have another opportunity to sell or lease a new vehicle.
• More service opportunities: Leasing customers are more inclined to take better care of their cars and maintain service records. They know the vehicle needs to be in good working condition at the end of the lease term and that they are liable for missed service intervals.
• More touchpoints: Leasing provides you more opportunities to interact with your customers. By building a real relationship with your customers, they become more comfortable with your dealership and — as long as you provide a positive experience — they will be more likely to return to your store when they are ready to lease or purchase their next vehicle.
Now that we’ve established why leasing is something you should be offering to your customers, how can you address the big elephant in the room? To say leasing is complicated is actually somewhat of an understatement. Leasing can be so complex that many dealers are fine with forfeiting all its benefits just to avoid the mess. But the times, they are a-changin’.
The Retail Influence
I think it’s safe to say the buzzword of 2017 was “digital retail.” Everywhere you look, consumers are flocking to brands that offer a completely paperless experience — including some that remove dealerships from the equation altogether. This newfound focus on efficiency is driven by what’s being dubbed the “Amazon generation.” It includes the millennials and Gen Xers who order pretty much whatever they want online and receive it on their doorstep within days (or even hours).
These types of car shoppers have triggered some serious technology development around buying — and yes, even leasing — a vehicle. Today, shoppers can browse cars on a dealer’s website, submit a secure application, and receive a decision within seconds. After choosing from available financing options, the contract can be esigned from a computer, tablet, or smartphone.
Some providers even offer the ability to securely send required documents, such as a driver’s license or utility bill for proof of residence, simply by snapping a picture with the customer’s phone or tablet and texting the image to the finance company.
Dealers who embrace econtracting and related technologies avoid overnight postage and delays due to missed signatures or other human error. They also typically enjoy faster, often same-day, funding.
A final huge benefit involves the ability to market beyond the standard 10- to 15-mile radius, particularly if you plan to offer doorstep delivery. To a customer who already plans to finish all or most of the transaction online, extra miles make little difference.
An Easy Button for Lease Calculations
All of this automation adds a level of convenience to vehicle leasing transactions that surpasses anything we’ve ever seen. The fact of the matter is that the standard leasing process is confusing and time-consuming for dealers. It’s so difficult that many dealers would rather put their customer in a seven-year loan than consider a three-year lease.
I’m happy to share that the tide is turning. The same automation that enables your customers to lease a vehicle from their couch is now being applied to the complicated worksheets, tedious deal structuring and kicked contracts we’ve seen with the status quo approach to leasing.
Solutions offered by my company and others automate the structure of your lease after receiving some basic information like customer and vehicle details, agreed-upon price, and down payment amount. With one click of a button, you can print the completed lease agreement and other documents needed to finalize the funding package. This certainly isn’t the norm, and that’s why I’m encouraged to see more and more innovation overtaking the typical lease.
I believe that, as technologies like this take hold, we will see an even greater groundswell of lease deals across the country. The demand is surely there, and I’m thrilled to say technology is catching up.
Richard Frunzi is president of dealer software provider MUSA Auto Finance.