As more carmakers introduce both traditional and renewable fuel options and consumers access flexible new payment methods to make their purchases, today’s auto loan industry is booming. Digital payment processors are becoming more popular than conventional paper-based systems, as shoppers elect the ease and control that the technology provides them. Auto lenders are wise to adopt as many payment processing options as possible to ensure that their customers can enjoy their purchase and satisfy their loan terms quickly and conveniently.
Putting the Consumer in Control
In the past, the auto loan industry structured its lending and payment processes to achieve swift repayments through standard banking processes. There was little to no room in the contracting process for the flexibility consumers needed to assume and satisfy a loan on terms that were best suited for them. So, while those industry practices optimized the lending process for the loan companies, the terms often made the repayment process more challenging for consumers.
Today’s digital financial services give each consumer the option to set up payment values and plans according to their personal circumstances. When car shoppers can choose how much and how often they pay, they are more likely to stay on track of their payment plan and fully satisfy their loan.
Offering Auto Loan Payment Options
These digital payment options give lenders the capacity to offer the vast majority of car buyers a wide range of auto purchasing options:
Online and IVR Payments
Any service that allows consumers to make a payment on their own terms and their own schedule will be attractive to car shoppers. Online and IVR payment systems provide this control.
- Many lenders embed an online payment portal directly into their websites, allowing borrowers to log in and quickly make their payment. Consumers have the most options for this service when the site owner optimizes the gateway for both fixed and mobile access.
- Interactive Voice Response (IVR) lets borrowers use their telephone to call into an automated telephone-payment system that can process their payment using an ACH, credit or debit account any time – day or night. This convenient service allows consumers to make their payments at times when they can’t access the internet, but do have access to a telephone.
Walk-in and Kiosk Payment Options
Many auto dealers and lenders are following the lead of the healthcare industry and give their customers the opportunity to make payments onsite.
While some may prefer to install a dedicated and staffed service desk that provides face-to-face customer service, a properly programmed in-house kiosk can provide the same service without the added cost of human resources.
Today’s digital payment kiosks offer exceptional security protections while facilitating the financial activity with virtually any bank or credit institution. Passwords protect every transaction, so consumers know their payment information is safe. And, because they don’t need staffing, kiosks are available to consumers around the clock – many of whom aren’t able to get in during typical work hours.
Improved Security Opens Up New Loan Term Options
Because shoppers have more payment options and can choose how they’re going to repay their loan, lenders have become more willing to add flexibility to their loan terms. Before the Great Recession of 2007-2009, most auto loans were scheduled for a maximum of 60 months. Consumers were required to stick to that term even if it meant an uncomfortably high monthly premium.
These days, many lenders are extending their loan terms to as many as 68 months, which gives borrowers more time to pay off the debt. The longer contract period lowers the monthly payment, which, again, improves the likelihood that the shopper will complete the scheduled payments on time.
Connect Multiple Accounts for Assured Payments
Typically, many car shoppers purchase a vehicle for use by a family of numerous drivers. Historically, however, auto dealers and lenders made car loans to a single person who was thereafter responsible for the entire debt.
Things have changed. Today’s families often have more than one breadwinner, any of whom have the means to make the payments on the family car. Today’s digital financial capacities can connect the auto loan to the accounts of multiple drivers so that more than one person can make anyone payment, eliminating the need to transfer funds back and forth from one partner to another. This flexibility allows consumers even greater opportunity to cover monthly payments in the way that matters most to them at that moment. When one partner or household member experiences a financial setback, there is no accompanying struggle to make a car payment because the system is set up to allow the other partner to make it instead.
There are as many car shoppers as there are car models, and auto loan vendors should be prepared to offer them the payment services and options they prefer. When given online, telephone and in-house payment options, consumers can choose the most convenient portal for their needs. And, because the digital payment services increase the odds of consumers repaying their loans, lenders can be more flexible when structuring the terms and the identities of the parties to their loans.
See the original version of this article on PaymentVision.
