Technology is ubiquitous, pervasive, omnipresent and, as it seems more and more, unstoppable.
We’ve seen it permeate through every aspect of commerce and communication in the last 15 years along with virtually every other facet of existence in the developed world. And that force has certainly swept up automotive retail in its wake.
One company that appears to be leading the charge in auto finance is TREND Financial. Known for its growth in the automotive non-prime space, 2017 is likely to be a transformative year for the Toronto-based company. With the expected launch of a new platform to help facilitate digital retailing of used cars, TREND is helping lead the charge to a new area of auto retail.
Canadian AutoWorld sat down with COO Eric Kaplan in late January to talk about auto finance, the evolving consumer and what is in store for 2017.
Canadian AutoWorld: From a finance perspective, how is the customer changing?
Eric Kaplan: We are really seeing how consumers are changing the way they budget.
In the past, if you asked a consumer about their budget the typical answer was always the selling price. More and more consumers are deciding their budget based on monthly payments.
Consumers also want to be involved more directly in the financing process, and I think that really stems from these new consumers demanding more transparency in all aspects of commerce.
But the current system, where a dealer controls the communication with the financing company and relays details back to the consumer, isn’t exactly a transparent process.
Exactly. This issue is evidenced by the consumer’s pre-purchase intent, which is what the consumer intends to do when financing a vehicle. Studies show that consumers prefer the dealer staying completely away from the financing of the vehicle because of the perceived lack of transparency.
But consumers are still walking into dealerships with a specific way that they want to complete the transaction that isn’t realized. Even with all the platforms coming out, the consumer’s pre-purchase intent is still not being attended to.
What is TREND doing to rectify the problem?
We have put a significant focus on technology over the last 18 months including building our own technology team internally to create a platform that we believe consumers are looking for but also one that recognizes the important role of the dealer.
Version 1.0 of our platform was released last August followed by version 2.0 in November. The second version offered an instant preapproval and marked the introduction of credit analysis tool, which generated very positive feedback from our beta group of dealers.
Version 3.0 was released Jan. 30. This version provides the consumer with an instant, customizable full approval. We also increased our beta group to 250 dealers nationwide.
And version 4.0, which will be launched later this year, is based upon the theme of providing the consumer with a total online experience that matches their buying behaviour.
So you are adding tiers?
Yes. We are the first to automate a credit adjudication engine that will never decline a consumer based on their credit. With this newly developed proprietary credit analysis tool we created TREND will be launching a 17-tier credit program later this year that is a significant increase from our eight-tier credit program. The 17 tiers will be able to work with every consumer regardless of their background.
You’ll be a one-stop shop.
This will be the widest credit spectrum in the industry. Rates will range from 6.9 per cent for prime to 34.95 per cent.
We will be able to work with every single Canadian, regardless of their history or what vehicle they choose. This is a major benefit for the dealer. They don’t have to spend time profiling the consumer to figure out which lender they think will approve them, and they don’t have to send the application from one lender to another should they be declined. We are one lender that can provide a competitive approval to all consumers.
What about paying deposits?
The system would have to offer the ability to pay a deposit on a vehicle online to hold the vehicle or to pay the entire selling price if they chose to purchase the vehicle for cash. It would also need to facilitate the purchase of aftermarket service contracts through the dealer or directly through aftermarket service providers. Any successful system would let the consumer ask questions and receive answers directly with the dealer, lender or service contract provider and give assistance with pre- and post-sale vehicle inspections.
This sounds like a digital retailing platform for used-car dealers.
For the first time ever, a consumer can say how much they have up front for a down payment or security deposit and how much they want to pay per month. The system will then show them every single vehicle in the dealer’s inventory that falls under their chosen parameters.
Once the consumer selects a vehicle, they will be able to fully customize the loan structure. As soon as they choose a structure, then we will verify the consumer including income and identity using the fully automated technology. All documentation will be created and signed electronically.
This digital process can happen inside the store, too, as TREND will be providing kiosks and tablets to dealers at no cost which run the platform inside their store. On a busy day, a customer could walk into your showroom and shop your inventory, get credit approval and commit to a purchase before ever having to talk to a salesperson.
Sounds like you are really embracing transparency.
For a platform to have long-term success it must offer full disclosure and transparency on all postings, consistency between all postings to allow for easy comparisons between multiple dealers. It must also offer the ability to shop for a vehicle by monthly payment, facilitate loan approvals directly from multiple lenders, restructure the loan approval directly with the chosen lender, complete any verification requirements online through the platform, sign the loan documents through the platform and more.
We hear rumours about a VIP program. Can you explain?
The VIP Partnership program is for our higher volume dealers. The dealer not only gets paid a competitive amount for today, but being a partner means they get even more money if the deal goes to full term through profit sharing.
Also, VIP dealers will get even more competitive approvals than the competition; that allows them to close more deals because of the relaxed credit parameters provided to VIP dealers.
How does a dealer currently benefit from using TREND along with all of the new technology?
A dealer using our technology will provide the consumer with the best customer experience available. Consumers are educated and now have access to such a significant amount of information that when they make a purchase decision and have to decide between competing companies, or in our case, car dealers, they can include within their decision which dealer offers better service.
Those service experiences can range from poor all the way to exceptional. So, when a consumer needs to make a decision between two dealers, with everything about the vehicle being equal, their decision will fall upon which dealer provides the best service and experience. This means using our platform will put the dealer ahead of the competition.