How Auto Dealers and Lenders are Tapping Equifax for a Cloud-Based, Digitized Lending Process

December 06, 2022

IN TODAY’S AUTOMOTIVE INDUSTRY, it’s clear that those dealers who are investing in more digital resources for their retail and lending processes are gaining a competitive edge. They’re leveraging relationships with key partners such as Equifax that offer advanced data analytics to help them effectively reach target customers more efficiently, through digital channels that satisfy the customer’s penchant for online shopping. 

William Holleman, Sales Director, Auto Verification Services with Equifax Workforce Solutions, commented, “Today's consumers are savvier than ever before, and they have high expectations when they embark on the car-buying journey. They don't necessarily compare different lenders or dealers anymore; they compare experiences. With so much of today’s shopping done online, lenders and dealers need to consider ways to provide the level of service consumers expect at every stage of the journey, from finding the right car to financing it.” 


Digital transformation is more than speed and compliance 

It's no longer enough for dealers and lenders to just adopt digital transformation strategies based on efficiency and compliance reasons. The right tools and resources can significantly impact the bottom line.  

In a study of U.S. auto lenders who process over 150,000 automated credit report (ACRO) inquiries for auto loan applications, the data showed a 2.45x increase in loan conversion rates for those lenders who leveraged automated income and employment verification as part of the decisioning process. In addition, conversion rates were substantially higher for borrowers with lower credit scores, demonstrating that using income and employment can dramatically help borrowers who face greater difficulty when obtaining a loan.  

“Lenders who leveraged income and employment verification data were, in some instances, able to provide lower interest rates or better loan terms to borrowers across all credit bands when compared to lenders who did not use these resources,” added Holleman. 


Why Cloud technology is a significant difference maker 

At the same time, few banking institutions or auto lenders have the in-house resources required to integrate automation tools to extract valuable and relevant insights from their data once compiled. Equifax is working with financial institutions of all sizes to provide access to flexible data integration and data access capabilities. Offering multiple delivery options can help lenders quickly adopt an enterprise-wide, standardized loan decisioning framework based on integrated income and employment data from a single verification source. 

Many financial institutions have mounds of data in their arsenal. When deciphering data points for advanced risk models, lenders are frequently left asking a lot of questions: How can I bring internal data together with up-to-date information from third-party data providers to create a comprehensive view of the loan applicant? And once that data is compiled, how do I best use this data to uncover insights for loan affordability? How can I act to make sound decisions and reduce risk? How can I use this data to convert more loans? 

“Cloud technology through Equifax can enable the purchasing experience consumers have come to expect by providing lenders with a quick but comprehensive view of borrower affordability,” said Holleman. 

Digital transformation strategies combined with today’s leading cloud-based data analytics from Equifax are helping dealers and lenders go beyond efficiency and compliance. They’re unlocking new opportunities for business growth. While traditional credit scores remain a strong indicator of creditworthiness, today’s consumers may be more complex. Leveraging alternative data sources in the decisioning process, such as income and employment information accessible via cloud platforms, can broaden the pool of potential borrowers for lenders, leading to more conversations and potential conversions.