AI expands credit access, elevates buyer experiences, and boosts profits
AI-Powered Financing upends the traditional FICO score-based model of lending to open more affordable credit to more people.
But more exciting to dealer managers and sales associates like you is how AI-Powered Financing leads to higher PVR, more cars sold, and happier customers.
Let’s dive into the top six ways dealers win with AI-Powered Financing.
1. Faster credit decisions for smoother customer experiences
Many dealerships realize that shoppers take a big pause in their online browsing when faced with a credit application. And once they do complete the application, waiting hours or even days to get a credit decision slows the process further.
AI-Powered Financing is built right into the Upstart Auto Retail platform, which lets customers browse and build their ideal vehicles to their heart’s content before requesting credit application data. And when they do fill out the form they get a nearly instant credit decision with only a soft credit pull1. All this, without even setting down their phone, makes for a much more convenient experience.
When customers are ready to enter the showroom and put their hands on the wheel, the convenience continues. From a showroom tablet, they can work with the sales associate to customize the finances—term, amount financed, rates, and more—without reapplying or going back and forth to the finance office. This side-by-side loan building puts the buyer in control, improving their experience.
But they don’t even need to enter the showroom. A streamlined AI-Powered Financing process combined with a robust digital retail platform allows for a completely remote shopping experience, should the customer prefer it. The convenience to shop anywhere, anytime, on any device brings the car-buying process into the customer’s life on their terms. No longer do they need to carve out hours of their day to visit the showroom.
Plus, offering better loans to more people improves customer satisfaction as near-prime and subprime buyers enjoy fair, AI-Powered loans they wouldn’t qualify for with traditional creditors.
2. Credit decisions without stipulations (income verification)
What about stips?
Stipulations to receiving credit approval, like requiring proof of income, can at best slow down a deal and at worst, tank it altogether. When a customer has to leave the showroom to acquire pay stubs and then bring them back, they have far too many opportunities to abandon the deal or go elsewhere.
Upstart’s AI credit screening process uses datasets beyond FICO including education, employment, digital signal, and behavioral. That means it can make faster and more reliable decisions without the customer’s paystubs since it’s already tapping employer, DMV, and other sources to verify an applicant’s income alongside their ability to pay back the loan.
In more than 70% of all loan applications, Upstart requires no stipulations like paystubs, tax forms, or references to prove income2. But even when it does require income verification, customers can simply snap a photo with their phone and upload them to the platform without delaying or disrupting the buying process. The same is true for other documents like driver’s license and proof of insurance.
3. Instant decisions and next-business-day funding for quicker cash flow
AI-Powered Financing is so accurate and trustworthy, it allows for instant credit decisions and enables lenders to deposit funds as soon as the next business day. That also means you can customize loan offers live, with no delay. Change purchase amounts, terms, discounts, durations, down payments, and more in a seamless app workflow and watch your loan offers update in real time.
Cash flow is king in the auto business, so this speedier funding means you can restock inventory and make other business investments sooner and with more confidence. AI-Powered Financing brings your contracts in transit to speeds you’ve never before experienced, accelerating cash flow to get money in your hands sooner.
With Upstart, 53% of AI-Powered auto loans are funded the next day and 86% receive funds within 3 days, as evidenced by a spring 2022 beta rollout at Del Grande Dealer Group. That also reduces any delay the customer might experience between signing their finance contract and turning the key. And getting your customers on the road in a new car faster makes everyone happier.
4. More approved borrowers
Because Upstart can approve borrowers that would be denied by traditional lenders, AI-Powered Financing massively increases the approved car-buying market for any given dealer. The same spring 2022 beta program saw Upstart making the only offer on more than 25% of deals submitted via Real Time Approvals.
Experian’s research points to roughly 30% of the American population having a subprime credit score. Within that number is a large group of Millennials and Gen Zers who are eager to get into a reliable car. While they may not have credit history to prove their worthiness in the form of a FICO score, they can still have strong, reliable incomes.
So while a buyer might walk in with a 510 credit score, a more robust, AI-powered review of their credit worthiness may place them on par with someone holding a prime 680 score, for example. We think of these buyers as “hidden prime” borrowers. This leads to a more inclusive lending practice which is especially helpful to populations historically locked out of nicer vehicles and more affordable loans due to only considering their credit scores.
You can be the dealer that supports its community by granting affordable credit to those who’ve experienced hard times but still need a reliable vehicle. AI-Powered Financing helps you get more people into cars—and loans—they love without locking them into high-interest loans.
You’ll soon earn a reputation as an equitable, trustworthy resource for reliable transportation and stand out for your exceptional customer experience. When customers enjoy every step of their transaction, you can bet they’ll come back–and tell their friends, too.
With an AI approach to financing, subprime borrowers can get the affordable credit they deserve. And dealers? They get the keys to a previously locked-away market, driving more sales through their doors.
5. Lower rates = larger purchases and higher PVRs
Upstart AI-Powered Financing’s lower APRs allow car buyers to put less money toward their loan’s interest and more toward the price of their car. It also puts more money in the dealer’s pocket. AI-Powered Financing allows you to offer loans with up to 185% loan-to-value and no backend, plus up to 3% reserve rates.
In 74% of loan decisions with multiple offers, Upstart’s options are the lowest, per the spring 2022 beta. That means they have more purchasing power with the same monthly payment. This buyer can now spend more on their car simply because they were able to choose a lower-interest loan from Upstart’s AI-Powered decision.
Without any uncomfortable sales pitches or drawn out conversations with a buyer, you can make extra money on a vehicle’s purchase price simply by offering AI-Powered Financing. That can mean a nicer trim level, a cooler shade of paint, a bunch of accessories, or even a whole different model the buyer previously couldn’t afford.
6. No extra application steps or platform-hopping
You and your customers get all the benefits of AI-Powered Financing with no extra steps added to the traditional lending application flow.
Upstart AI-Powered Financing asks for the same data and the same in-app process as when applying for a traditionally decided loan. The AI decisions are even displayed side-by-side with offers from traditional lenders. So from a buyer’s perspective, it takes no extra time for them to potentially save thousands of dollars on their loan. In fact, the process can actually move faster, since the AI automatically collects information traditionally collected manually through stips.
Upstart Auto Retail also links AI-Powered financing directly into the contract and desking workflows. Upload and sign documents right in the app and eliminate the need for shipping contracts between lenders.
Enjoy the same intuitive platform for a truly seamless experience from the customer’s initial browsing and outreach on their own device to the moment you hand them the keys.
Upstart Auto Retail brings AI and so much more
Launching your dealership’s financing into the digital era brings a wealth of benefits for your business while empowering more customers to borrow affordably. AI-Powered Financing seamlessly enters your showroom workflow via Upstart Auto Retail, an omnichannel digital car-buying platform beloved by digital-savvy dealers.
Find more resources for modernizing your car buying process by visiting the Upstart Auto Retail resource center or dive in to learn how the platform works. And check out the shareable infographic: The top 6 benefits of AI-powered financing for car dealers.
1This initial (soft) inquiry will not affect credit score. If the user accepts the loan and proceeds with the application, we do another (hard) credit inquiry that may impact credit score.
2As of 3/31/2022. Fully Automated metric is calculated on a quarterly basis. Fully automated loans are defined as loans originated end-to-end (from initial rate request to final funding) with no human involvement.