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Financing the car

of the future
Reimagining the auto finance
customer experience

A joint publication
of AutoFi and PwC

Sign here for your

new auto loan

Welcome to the future

of auto finance
Introducing a new era of auto finance
How lenders and dealers can offer a customer-driven experience
The automotive industry as a whole is facing an So, what does the auto financing experience of the future
unprecedented wave of innovation and change, from entail?
connected cars to ridesharing to autonomous vehicles.
• Educating consumers and empowering them to take
Over the next 5-10 years, the ways in which consumers
ownership of their experience.
own and use vehicles may be dramatically reshaped—and
so will the ways in which they shop for and finance them. • Turning financing from an afterthought into a key
part of the overall customer experience.
Some progressive dealers and manufacturers already are
beginning to rethink the car-buying experience, offering • Providing customers with options so they have the
both new online capabilities and in-dealership tools such time and information necessary to make informed
as virtual reality. However, at most dealerships, the auto financing decisions—on their own schedule.
finance process of today looks much like it did several
But this is easier said than done, especially in the indirect
decades ago—paper-based, manual, and completed
lending model. The car purchase and financing processes
behind the scenes.
are so intertwined that significant collaboration is
But consumer expectations are changing, driven both by required to effectively transform the end-to-end
the increasing number of millennial purchasers and by experience. This is further complicated by the fact that
the ubiquitous ease of digital interactions in so many most dealers work with many lenders, each with its own
other industries. program and requirements.
At PwC and AutoFi, we see significant opportunity for So who should take the lead in improving customer
both dealers and lenders to leverage technology to usher experience? While dealers primarily control the financing
in a new era of financial transparency and turn the experience, they’re not the only source of potential
financing experience into a competitive advantage. Our innovation. Lenders can exert influence and offer tools to
research has identified a number of potential customer support their dealer partners as well. Both auto dealers
pain points—and solutions to address them. and indirect lenders have a significant opportunity to
gain market share by providing a seamless, customer-
centric financing experience.
Improving your customer experience provides direct bottom line impacts

Dealers Lenders
• Increase conversion rates • Increase likelihood of selection by dealer for
• Decrease negotiation time/minimize future transactions
staff time required per transaction • Increase opportunities for cross-selling
• Increase customer loyalty, leading to • Decrease likelihood of refinancing
service business and repeat sales • Leasing customer loyalty for captive lenders
• Decrease dealer overhead by • Potential transition to direct channel for
cutting time spent on finance future purchases

This paper focuses on indirect lending because of the The remainder of this paper will cover:
increased complexities driven by the dealer model and
the need to support omni-channel interactions, including • How customers would like to see the auto financing
in-person transactions at the dealership. However, many process change
of the same considerations, particularly around the • Drivers of consumers’ desired experience, including
benefits of digital solutions, are also applicable to direct “purchase scenarios” and “borrower personas”
lenders.
• An overview of a potential future-state experience
Read on to find out more about what your customers are intended to align to customers’ new expectations
looking for, and how dealers and lenders can become • A roadmap for both dealers and lenders to follow to
leaders driving the future of auto finance. enhance their experience

PwC | Financing the car of the future 2

A closer look at today’s auto finance experience
Opportunities to better meet your customers’ financing needs
PwC and AutoFi conducted a broad range of research and Consumers want a quick and easy financing process, but
analysis into consumers’ auto finance experience, they also want control over the experience. Consumers
including assessment of consumer reviews of dealers and may want to consider financing at different points in the
lenders, a series of small focus groups with consumers overall purchase process, so it’s critical to be able to offer
who have financed vehicles in the past 12 months, and financing information and pricing up-front, not only at
in-depth interviews with dealers currently implementing the very end after a vehicle has been selected.
enhancements to their financing process.
Additionally, educating consumers can be critical, since
Our research indicates that there are significant customer knowledge about financing can vary
opportunities to better meet customer financing needs significantly—and so can their desired interactions and
and provide a financing experience that supports and the level of support they need.
adds value to the overall car-purchasing process.

Our focus group participants identified a number of areas where

their financing experience could have been better

1 “I walked out with an overwhelming amount

of paperwork.”

“When I finally got into the [F&I] office, I felt rushed

2
to sign all the documents and didn’t have time to
understand everything I was signing.”

3 “During the financing phase, I was confused by

all of the add-on options and felt like
I had no guidance.”

“There was no follow up or personalization 4

after I purchased my car. It was like they were
just trying to get the deal and get me out.”

5
“I don’t want to sit in the office for hours.”

1Focus groups were conducted with approximately 30 consumers who purchased and financed a vehicle within the past 12 months, in small groups of 2-4 participants.

Findings may not be representative of the larger consumer population but are referenced throughout to provide color on consumer opinions regarding specific
practices. Additionally, in-depth interviews were conducted with three dealerships currently undergoing pilots using AutoFi’s solution, including one online and two
brick-and-mortar dealerships.

PwC | Financing the car of the future 3

A closer look at today’s car-financing experience

The auto finance process should be designed to help get Here’s an example: The discussion with F&I usually takes
customers in the right vehicle at the right price, with a place after the customer believes the monthly payment
financing structure that they can afford. Today’s process, has been set, thereby causing confusion. After-market
which was largely developed in an era before many of products may be beneficial to the customer but can
today’s technological advances were available, may not increase the monthly payment, which can catch the
always be fully optimized to achieve these goals. While customer off guard.
details vary by lender and by dealer, some common
From reducing “decision fatigue” at the end of a long day
themes emerged from our analysis. Many consumers find
at the dealer to offering better tools to help answer key
the current process too rigid and sequential—it provides
questions about financing options, consumers are
the customer little control, and in many cases has not
looking for changes that make financing more accessible
evolved to meet their new experience expectations.
and user-friendly.

Initial interest
1 and consideration
As customers start to research vehicles, they
likely haven’t even started to consider 2
financing … other than maybe to check if they Research and
can afford an estimated monthly payment. evaluation

General competitive interest rate information may be

available online but often cannot be easily customized to
all customers, vehicles, or transactions.

Preliminary purchase
decision
After the customer has Preliminary
3 decided on a car, the
question of affordability
financing
decision
4
continues to loom.

Customers may feel an “information overload” as they try

to answer a multitude of questions. “Loan or lease?”
“Does a more affordable monthly payment equal a better
deal?” Customers should be educated along the way to
build long-term brand and dealer loyalty.
Customer dissatisfaction can
Finalizing the occur when add-on products are
transaction bundled or negotiated after the
customer thinks they’ve agreed on
5 a monthly payment.

Finally, it’s time to complete the paperwork. But this

too can overwhelm customers who don’t have time
to understand everything they’re signing.

PwC | Financing the car of the future 4

A closer look at today’s car-buying experience
Common customer pain points identified in our research

The financing process can be more Borrowers may not fully understand
complex than borrowers expect their financing structure

• Many borrowers are surprised that a transaction they • Today’s process frequently emphasizes the monthly
view as “simple” is so complicated and time- payment as the primary focus of financing
consuming. negotiations, so customers may have limited
• Borrowers are often caught unprepared by specific understanding of the terms of their loan and their
requirements such as proof of income or proof of impact on the total cost of financing.
insurance—and these requirements can cause • Trade-ins may cause confusion, as consumers may not
significant delays and negative experiences, especially get the value they expected and may not understand
when they’re paper-based. the impact of negative equity.
• Borrowers often face “decision fatigue,” since the F&I • Leases present unique challenges due to limited
process typically isn’t started until customers are borrower understanding of lease terminology and
already drained from selecting a vehicle and calculations, and complicated decisions such as
negotiating price—and already eager to get their new mileage allowances.
car out on the road.
• As a result, borrowers may not take the time to fully
understand how add-on products can benefit them.

Borrowers may feel pressure due to Borrowers may not have

limited understanding of the process appropriate context to know if
and their options they’re getting a “good deal”

• Borrowers may feel like “extra costs” are being sprung • Borrowers are typically presented with only a single
on them at the last minute after they’ve already agreed financing offer and are not aware of how the decision
on the price of the car if they were not coached on the was reached or what factors affected their pricing.
F&I process along the way. • While some borrowers are beginning to comparison
• Consumers may feel pressured to sign paperwork right shop even at the point of sale (e.g., on their mobile
away to make sure they get the vehicle they want. device while at the salesperson’s desk), many don’t
• Consumers may face a higher risk of unexpected know where to turn with questions .
changes if they take possession of the vehicle with a • Many borrowers still don’t feel they have the
contingent contract/before financing is fully approved. information they need, so comparison shopping will
likely continue to increase as more information
becomes available and consumers educate themselves.

PwC | Financing the car of the future 5

In their words …
What customers are saying about their experience

Select quotes from PwC and AutoFi focus group participants1

Research I got comfortable with the rate by doing
preliminary research and I think I used
[a third-party site] to get a benchmark.

Trade-ins Very difficult to get over the hurdle of I had gotten an offer from the dealer
negotiating the trade-in. that I thought was low. I actually took
the trade-in to [another dealer group]
and did their free appraisal process.

In-person And then you just sit and have to wait It was kind of the painful paper process.
negotiations for a salesperson for a long time. So that Very traditional. It did not leverage
was frustrating. technology at all.

It took longer than I anticipated to sit The back and forth with his manager
down through all of the paperwork. on settling the terms just took way
too long.

F&I process Even though I made it pretty clear that I So I just kept saying no, no, no. He was
don’t want to buy the prepaid just doing his job, but that’s really the
maintenance package or any extended frustration of going—having to sit in
warranties, he still went through the the F&I office.
laundry list of additional things that he
could offer me.

Final paperwork I felt rushed to sign all the documents I did a lot of signatures and I was left
and really didn’t have time to think with a nice [company name] folder
through what I was signing. stuffed with paper as my parting gift.

Account There was no offering to help set up my

onboarding mobile application/account. An
overview would have been beneficial.

Our focus group participants identified opportunities to enhance the financing process from start to finish. Reviewing
your customers’ feedback and complaints can help identify targeted areas for enhancements based on your own
specific operations. It’s critical to review feedback in the context of how financing fits into your overall purchase
experience—and to understand how your incentives and operational structures are driving certain behaviors.

But what AREN’T they saying?

Many consumers may not You may have a customer experience
understand financing well opportunity even if it’s not showing up
enough to know what questions directly in customer feedback.
to ask or what options could Take a step back, put yourself in their
be available. shoes, and walk through your own process.
1Statements from focus groups have been lightly edited for space and clarity.

PwC | Financing the car of the future 6

What needs to change?

One reality of auto finance is that most consumers view By focusing on the following areas, dealers and lenders
the product as a means to an end. Consumers don’t see can redesign their indirect lending process to more
themselves as shopping for an auto loan or lease—they effectively support the overall car-buying experience and
think they are shopping for a vehicle and simply view the better meet the needs of customers. This will not only
loan or lease as the method of payment. While this vastly improve customer satisfaction, but also minimize drop-
oversimplifies the nuances of auto finance, it’s important out, as customers’ sources of frustration are eliminated
to consider this mindset when designing an optimized and they opt to continue further through the sales and
financing experience. You need to minimize friction and origination funnel.
make financing feel like an easy “check out” experience.

Negotiations take too long, and are frustrating

Borrowers expect to negotiate with someone who has the authority to make a decision. “Let me talk to
my manager” isn’t an acceptable solution anymore. Finding ways to minimize the back-and-forth is
key–whether in the form of “hassle-free” up-front pricing or a different interaction model with real-
time decisions.

Some customers don’t understand key elements of financing

Customers have more information than ever about the value of vehicles, but they’re also
looking for better information to help them find the right financing. Helping your customers
understand concepts like how a longer loan term affects the total cost of financing as well as
the monthly payment can create a more productive negotiation and positive relationship.

Customers want to talk finance on their schedule, not yours

Some borrowers may want to understand what they can afford up-front before looking at vehicles,
especially if operating on a tight budget. Others may prefer the current arrangement. Rather than
having a single process flow, dealers should offer a modular process in which financing can be
discussed whenever the borrower is ready.

Customers are caught by surprise at the end of the process

Surprises after consumers think they are “done” are one of the largest sources of frustration.
Additionally, consumers should not have to familiarize themselves with all of the
documentation and terms and conditions on the fly. The more of this that can be handled before
the final negotiation the better, especially if borrowers can review documents at home in
advance and learn more at their convenience.

Digital hasn’t been fully integrated into the process

Many dealers don’t yet offer online financing, and for those that do it often feels like a separate
experience once customers get to the dealership. Online lending can help address many of the
challenges outlined above, but the digital channel needs to be integrated with the in-person
experience. Customers shouldn’t need to re-provide information they’ve already entered online.

Customers are confused by add-on products

Add-on products are a leading source of confusion, so providing additional information about
options in this area is critical. Dealers should be prepared to help customers understand what
add-ons are available, how they can assess whether the products make sense for them
individually, and how the products affect monthly payments and total cost.

PwC | Financing the car of the future 7

What’s the impact of a negative experience?

A negative customer experience is clearly bad in and of itself, but it’s important to recognize that these negative
experiences also have both short-term and long-term ramifications for the business and its bottom line. From
increased operational and regulatory risk to potential loss of revenue and future business, there are many incentives
for dealers and lenders to improve their customer experience.

Lack of customer loyalty

Many consumers in our focus groups expressed
that they would be unwilling to return to the dealer
from which they purchased their last vehicle
because of their negative experience.
While indirect lenders may not face such a direct
threat, they may find that customers are more likely
to refinance with another lender or be less open to
cross-selling due to a negative experience.

Poor customer
satisfaction index Elevated risk of default
scores Many customers appear to base their loan or lease
decision on limited information without full
Dealers that score poorly on CSI understanding of the actual terms and structure of the
may find that manufacturers and financing. As a result, they may not be prepared to
lending partners are less willing make their payments, and may commit to financing
to work with them, or treat them they can’t afford.
as lower priority partners.

Increased regulatory risk

Our research indicates significant potential for borrower confusion related to
auto finance, which may result in increased regulatory scrutiny for both
lenders and dealers. Similarly, both the CFPB and FTC have identified
potential risks in this area. Both have published guides for consumers, and
the FTC is planning a survey on consumer experience.1
In addition to potential unfair, deceptive, and abusive acts and practices
(UDAAP), fair lending, add-on products, and dealer markup are areas of
regulatory focus. Lenders and dealers should transparently provide
customers with the necessary information to make informed decisions, and
clearly define what role the dealer plays during the credit application process.

• Lifetime household relationship value

Do you understand
the cost of losing a • Customer acquisition costs are higher for “net
new” customers than repeat customers
dissatisfied
• Incremental post-purchase/origination
customer? revenue streams
1 https://www.ftc.gov/system/files/documents/federal_register_notices/2016/01/160107autosurveyfrn.pdf

PwC | Financing the car of the future 8

Why isn’t today’s experience better?
Exploring reasons behind the lack of ownership of innovation

Does it feel like your business is stuck spinning in circles? You’re not alone.

How to
break the
cycle of “I don’t
today’s think I
status can solve
quo? this
alone.”

Indirect auto finance presents a challenging environment for innovation because of the complex relationships
between lenders and dealers. At the same time, customers have not fully taken matters into their own hands to
improve their own experience or drive change.

The indirect model makes it Despite improved information

unclear who should take the lead availability, many customers
in investing in innovation, and still haven’t been active in
requires collaboration empowering themselves

• Dealers typically work with multiple lenders, so • Many consumers find the car-buying process
they are unable to offer new capabilities unless confusing. This can make the overall purchase
multiple partners can support them. experience overwhelming, and this anxiety transfers
into the financing process.
• Lenders have to accommodate large networks of
dealers with different levels of sophistication. • One dealer we interviewed indicated that only 50%
of customers try to negotiate.
• Dealers are the primary owners of customer
interaction, but many are fragmented and • Most borrowers fail to take simple steps like
lack sufficient budgets to invest in technology obtaining pre-approvals or checking trade-in values
infrastructure. in advance. Many aren’t even aware of available
resources.
• Lenders and dealers may also be dependent on
integrations with technology service providers • Auto finance has not yet reached a tipping point
and other participants in the auto finance where consumers have “voted with their wallets” to
ecosystem. demand a better process, but that point may be
approaching as digitally-enabled alternatives
become available.

PwC | Financing the car of the future 9

What drives consumers’ car-buying preferences?

The clearest takeaway from our research was that there is a wide variety in how consumers wish to interact with their
dealer and lender throughout the car purchase and financing experience, and what role they expect the two entities to
play. Our research indicates that there are two primary sets of factors affecting borrowers expectations from their
auto finance experience:
• Their personal characteristics and personality, as represented by a “borrower persona.”
• The trigger that causes the borrower to need to purchase the vehicle, or their “purchase scenario.”

Borrower Purchase • Channels and tools used for research

persona scenario and communication
• Level of effort and sophistication in
negotiation process
• Objectives, satisfaction drivers, and
“success criteria”

Purchase scenarios Borrower personas

Every customer purchases a vehicle for a specific Our research shows that the factors that drive consumer
reason—such as the examples listed below—and that expectations are more complex than broad
reason can have a significant impact on how the customer demographics such as millennials versus baby boomers.
approaches the entire transaction, including financing. In fact, PwC’s Consumer Experience Radar indicates that
The purchase scenario will affect their answers to borrowers are increasingly open to a digital experience
questions such as: across a broad range of age groups, but even among
millennials there is significant variation in which part of
• How quickly do I need the vehicle?
an auto finance transaction each borrower wishes to
• To what extent am I willing and able to complete online.1
shop around?
Instead, we found that the differences could best be
• How comfortably can I afford the vehicle? represented through borrower personas, representing
viewpoints and emotional responses that appear driven
not just by demographics and financial sophistication
End of prior but also by a borrower’s underlying personality traits.
loan/lease

Accident or emergency
Aging vehicle/ Each customer’s
standard expectations are unique.
replacement Put your customers in
Life event control and empower
them to make the
Financial/ experience their own.
savings milestone
1 http://www.pwc.com/us/en/consumer-finance/assets/pwc-consumer-lending-radar.pdf

PwC | Financing the car of the future 10

1 http://www.pwc.com/us/en/consumer-finance/consumer-lending-radar.html
A closer look at borrower personas

Our research identified significant variance in consumers’ desired experience across many different dimensions. With
this broad range of expectations to address, technology alone won’t cut it. Your salespeople still matter, and they’re
key to building effective customer relationships by leveraging digital tools.
While further analysis is required to fully understand the impacts of borrower characteristics on auto financing
mentality and behavior, the following illustrative borrower personas are meant to represent some of the areas where
your financing process should be flexible enough to accommodate a broad range of customer approaches.

What do I want? What can I afford?

Some borrowers use their budget to drive the decision of what car to purchase (rate shoppers), while others start
with the vehicle they want and then try to find the cheapest way to finance it (car shoppers).
Impacts: Offer up-front visibility into pricing for consumers who want it—but don’t force the issue.

Fight to the last penny As long as it’s fair

Some borrowers are concerned with getting the absolute best deal possible, while others just want an easy process
that gets them out of the dealership quickly.
Impacts: Coach your sales team on how to manage the negotiation process based on
customer cues.

The thrill of the hunt In over my head

Similar to the dimension above, some people love to negotiate, while others hate it and feel overwhelmed.
Impacts: Consider whether fixed, non-negotiable pricing is right for your customers, or when and
how to incorporate negotiations into your process.

Car guys/gals and gearheads I don’t care how it works, just fix it
Some borrowers are extremely knowledgeable (and passionate!) about cars. Others just think of it as a means for
transportation and don’t care about all of the specs.
Impacts: Provide options for customer education and add-on product sales approaches.

I picked you because you’re the best … because you’re the closest
Some borrowers just want to get as good of a deal as they can at their local dealer, while others will shop around
and explore every option.
Impacts: Understand what level of information your customers need to make their decision.

People person Digital introvert

Some borrowers thrive on in-person interaction, while others want to avoid it and prefer to keep their interactions
electronic.
Impacts: Offer multiple communication strategies and technology expectations.

Consumers don’t always see eye to eye when it comes to how

auto finance should be handled. You need to be flexible
enough to anticipate and respond to those differences.

PwC | Financing the car of the future 11

… but wait, innovation is starting to occur
Industry leaders have demonstrated the experience CAN be better
A small number of innovators already offer better
experiences today. And their leading practices can serve Leading dealer
as a starting point for organizations to emulate and then
expand upon as they develop their own capabilities.
innovations

• Online pre-approvals
Select focus group comments1 • Mobile applications
• e-contracting
“They didn’t actually require a lot from me to • Intuitive user interfaces with gauges and sliders to see
get the loan approval. They already had most the impacts of financing changes
of your information on file, so it’s literally 10
or 12 questions on what you want.” • Direct integration with lending partners, especially
captives

Leading indirect lender

“I think lots of e-disclosures [help] too; the
ability to basically e-sign everything really
innovations
makes it easy as well.” • Integration with dealers’ websites
• Borrower education tools
• Digital customer onboarding
“It was e-contracting. It was paperless, and it • Partner-driven car-buying services and concierge
was great.” experiences
• Scenario-driven cost comparison shopping

Recognition that a better experience is possible has led a number of dealers to implement new capabilities and look
into partnership opportunities with lenders and technology providers that can help integrate financing into their
overall digital experiences and streamline their financing process.

One of the dealers we spoke with highlighted that customers are coming into the dealership more educated than ever
before, and in many cases may even know more about certain topics than the sales staff. Innovative dealers recognize
that as the tools available to consumers continue to improve, they will need to be prepared to support a new customer
engagement model—one based not on an information asymmetry, but on a mutually beneficial transaction that
provides a high level of customer value.

Change is coming, and it’s time to embrace it

Third-party tools Direct lenders Other industries Dealers at the

have reduced have made it and asset classes forefront of
dealer control easier than ever have reshaped innovation can
over the flow of to get a consumer take market share
information competitive offer expectations from less
sophisticated peers

1Statements from focus groups have been lightly edited for space and clarity.

PwC | Financing the car of the future 12

The future state process flow
The road to customer satisfaction can take many paths
The future car-buying process should be responsive to While some modules, such as signing the final
consumer needs and be customizable based on the paperwork, will be required for all transactions, you
information and support they need to make a purchase should strive to make those as flexible and efficient as
and financing decision. Your process should consist of a possible so they don’t become flashpoints of continued
series of interchangeable modules that can be completed customer dissatisfaction.
in different orders, or even skipped entirely, based on
your customer’s needs.

One overall
process … two
very different
Illustrative customer experience borrowers …
Borrower A Borrower B
modules both satisfied.
Borrower A is
Payment budget-constrained
and wants to fully
understand what
Finance research vehicle he can
afford. He takes
and selection
advantage of
educational tools
up-front, looks at
Vehicle pricing financing options to
determine which
vehicles fit his
budget, and then
Vehicle research revisits financing
and selection after selecting a
vehicle to make sure
he got the best deal.
Loan account
setup Borrower B knows
what she is looking
for and that she can
afford it. She
Transaction quickly selects a
structure vehicle and handles
negotiations for
both the vehicle and
Borrower her financing
simultaneously to
education find the lowest total
cost option. Her
goal is to get a
Initial great deal and get
consideration back on the road …
fast.

PwC | Financing the car of the future 13

A new model of customer engagement
Empower customers to take control of their experience
Dealers can build stronger, lasting relationships with Both borrowers and lenders can experience significant
their customers by changing the customer engagement benefits from this shift in mindset, as customers who are
model to position themselves as an ally helping the more engaged in the decision-making process and
customer obtain the best financing option available. By understand the options available to them are likely to
creating more of a “direct-to-consumer” feel and advising have a better understanding of what they can truly afford
customers, dealers can retain their key role in the to pay. Additionally, this new model enables lenders to
financing transaction while giving the customer more truly compete on customer experience and create value
control. for their brand.

Traditional transactional facilitator model

Dealers today frequently select a financing source, negotiate with that source behind the scenes, and present a financing
offer to the consumer. Obtaining financing is simply a service provided by the dealer to help enable the consumer to
complete the transaction.

• Single offer presented

• Dealer-owned process
$

$
$
$

New customer advocate model

Dealers can transform this interaction to give their customers control over the entire end-to-end transaction, including
financing, while still maintaining their valuable role as an aggregator of financing sources. By educating consumers on
the financing options available to them and providing tools to help them make informed decisions, dealers can put
their customer in charge. Customers can feel a sense of “ownership” of their financing decision and know they are
getting the best deal available, and the dealer can play a powerful role as an advocate throughout that process,
establishing the dealer as the customer’s ally and building a positive, lasting relationship.

• All available options

presented

$ $ • Customer-owned
process

$
$ $ $ $

$ Dealers can offer a full online point-of-sale (POS)

process to support the new interaction model

PwC | Financing the car of the future 14

Help your customers find what they’re looking for
Build a process that empowers your customers
Your future state process should be designed to help customers interact with you in the method of their choosing.
Any decisions about what functionality to develop, tools to provide, or services to offer should be driven by the
question, “How might my customers want to purchase and finance their vehicle?” By taking a customer-centric
approach to design, you can make sure that any investments in new technology provide appropriate return on
investment and actually lead to customer benefit.

Use digital to support your Let customers choose their

desired experience own experience
• Make digital an extension to, rather than a • Make sure your modular process can support
replacement of, your on-site offerings. multiple flows, and different levels of support and
• Recognize that customers still prefer a quick and information based on the sophistication and interest
easy paper process over a difficult digital one. of the customer:
• Salespeople still matter. Offer hybrid solutions - When do they want to discuss financing?
with both online and offline options available. - What channel do they want to interact through?
• Align your brand experience across channels, - What part of the sales process do they want to opt-
including digital. out of or skip?

Compete with the best Consider the needs of the

direct lending has to offer individual borrower
• Assess your competitors’ • Continue building relationships.
capabilities and match or • Recognize that one size doesn’t fit all.
exceed their ease of use. • Train staff on behavioral cues and how to
• Incorporate tools such as read customers.
comparison shopping and • Don’t be afraid to ASK what the customer
up-front credit terms. is looking for.
• Offer approvals and pricing • Help the customer choose the best option
as quickly as possible. for them, such as mileage options
on leases.

Minimize the time Facilitate the information flow

commitment • Integrate with and provide access to
• “Decompress” the time third-party tools such as
required at the dealership independent confirmations and
by letting customers review sources of information.
Don’t neglect the onboarding
documents at home in • Maintain ownership of the
process
advance or following up relationship throughout their
after the fact. • Make the most of the time when
research.
consumers are most receptive to
• Respect customers’ • Help customers understand their
options like auto-ACH.
schedules and help them options, even if they don’t know what
understand up-front how • Consider what role the dealer can
questions to ask. For instance,
much time is needed. play in helping customers connect
provide a side-by-side loan and
with their new lender.
lease comparison.

Help borrowers plan their finances

• Offer budgeting tools to help borrowers save for their down payment or to make their monthly payments.
• Provide clear visibility into what they will owe at each point from Day 1 to the end of the loan/lease.
• Explain the impact of their choices, such as when credit will be pulled and the impact on their credit score.

PwC | Financing the car of the future 15

From the dealer’s perspective …
More dealers are recognizing the need to improve the process
Dealers are at the front lines of the market every day, Whether online dealers or more traditional brick-and-
helping customers through the financing process. As mortar dealers, it’s clear that dealers see significant
such, they have keen insights into what their customers changes coming to their customer engagement models in
expect, and what tools help them deliver on those the area of finance. Digital capabilities can be an
expectations. In-depth interviews with dealers in the important enabler but, regardless of channel, the key is
process of implementing financing enhancements to offer flexible support for a range of consumer
revealed a consistent awareness of many of the same preferences. Both dealers and their lending partners
opportunities to improve the financing experience that need to be prepared to support new forms of interaction.
were expressed by consumers.

What do dealers think Dealers indicate that borrowers’ level of

customers are looking “credit education” and understanding of
for in their website? finance is all over the map.
• Ease of use Some borrowers come in knowing more
• Automation than the salesperson, while others still
• Transparency need a lot of help.

A personal touch …
All of the dealers we spoke with said they believe the
quality of their salespeople still matters, and will continue
to matter, even as the financing process becomes more
automated and increasingly moves online.
Salespeople can play a key role in relationship-building and
in supplementing available tools to provide borrower
education. We recommend that dealers provide their sales
staff with the tools and support necessary to maximize the
effectiveness of these key resources:

Provide technology solutions to

$ aid in information-sharing.

Give your sales team options to

“tailor” a personalized
experience for each customer.
Leading dealers recognize that
Help your team provide expert
a great financing experience is advice—potentially by
a new way to stand out from partnering with your lenders.
the competition.
Simplify internal processes so
your sales staff can spend more
time helping customers.

PwC | Financing the car of the future 16

The role of digital

Many of the customer experience capabilities covered in this paper can

be enabled and significantly enhanced through the use of technology—
particularly in the form of digital interaction with consumers.
Dealers and lenders alike are still trying to determine who should own
each component of this digital experience. While customers likely turn
to dealer websites to start their research, finance-specific components
may best be handled on the lender’s digital network.
However, splitting functionality across separate digital platforms may
Even the best digital
present challenges when trying to provide a cohesive end-to-end tools won’t help unless
experience for the customer. borrowers activate and
Dealers and lenders should collaborate—and consider partnering with use your app or website.
third-party technology providers when appropriate—to make sure that
the experience is seamless from the customer’s perspective, regardless Up-front communication
of who owns each component. and education are key.

Potential digital functionality for dealers and

lenders to consider
Research support
PwC’s Consumer • Dealership locations and inventory
• Loan versus lease calculators
Lending Experience • Online borrower education support
Radar found that
many borrowers want Enhanced transparency
a full online point of • Advance pre-qualifications and pre-approvals
sale experience.1 • Hassle-free, up-front pricing
• Add-on product descriptions and key considerations
• Third-party comparison tool integrations
Most auto borrowers prefer • e-disclosures
digital channels to:
Streamlined processes and document management
• Research loan types/ • e-signatures/e-contracting
rates • Mobile document upload
• Apply for a loan • Preview documents in advance of signing
• Pre-populated data to reduce manual entry
• Submit documents • Omni-channel save and resume capabilities
• Review documents
Sign Here for your new Onboarding and loan servicing
• Sign documents
Auto Loan • Payment reminders
• Pay up-front costs • Online bill pay and auto-bill pay setup

Ancillary features
• Vehicle service reminders
• Budgeting and personal financial management tools
• Gamification to drive engagement

1 http://www.pwc.com/us/en/consumer-finance/assets/pwc-consumer-lending-radar.pdf

PwC | Financing the car of the future 17

A roadmap for lenders and dealers
Dealers and their lending partners must take parallel paths to reach the same objective.
The road ahead will be challenging. Going digital isn’t as For both lenders and dealers, many of the same themes
simple as flipping a switch or designing a new website. apply:
And giving your staff tablets isn’t a panacea that will
• Think strategically but act tactically.
instantly fix all of your problems. Instead, innovation will
be a process that requires cultural and process change as • Consider how each innovation fits into your overall
well as new technology. Digitizing your current paper- roadmap and vision for your
based processes isn’t enough. You need to reimagine how customer experience.
you interact with customers and design new, more
• Embrace continuous innovation. Learn
efficient, more flexible ways to serve them. Yes, it will be
and iterate.
difficult, but it can be done—especially through effective
cooperation between dealers and their lending partners. • Don’t leave traditional customers behind.
This roadmap provides guidance on how develop a
nimble innovation process that is prepared to respond as
the market and your customers’ expectations continue
evolving.

Innovation will require partnership and effective collaboration between dealers, lenders, and
other ecosystem participants, such as technology providers

Dealer Lender
roadmap roadmap
• Clearly outline expectations for lender • Determine what capabilities you want
partners or find an aggregator partner to to offer to your customers—and which
help manage those expectations. you can own yourself versus which are
• Enhance your own digital capabilities, dependent upon dealers.
and make it easy for lenders to integrate • Include large dealer groups as partners
with you. in co-creation. Captive lenders in
- Build financing into your online particular may have unique
shopping experience. collaboration opportunities with OEMs.
- Offer standard application program • Identify technology service providers
interfaces (APIs) to connect into your that work with multiple dealers, and
process. partner with them to build
integration capabilities.
• Determine your strategy for lenders that
don’t have digital capabilities. Consider • Consider the full end-to-end process,
under which scenarios you use them, and including post-purchase account
how you can continue to offer a positive onboarding. Your job isn’t over when
borrower experience the customer gets the keys.

Both lenders and dealers should remember to consider their

process through the eyes of their customers as they reengineer it

PwC | Financing the car of the future 18

 To learn more about how you can put your
customers in the drivers’ seat of their own
experience, contact

PwC AutoFi
Roberto Hernandez, Principal Kevin Singerman
M: (940) 367-2386 CEO and Co-Founder
roberto.g.hernandez@pwc.com M: (917) 655-0729
kevin@autofi.com
linkedin.com/in/robertohernandez1

@RobertoGHern

Martin Touhey, Principal Jonathan Palan

M: (206) 790-8751 President and Co-Founder
martin.e.touhey@pwc.com M: (212) 920-7334
jonathan@autofi.com
linkedin.com/in/martintouheypwc

@METouhey

Craig Schleicher, Senior Manager Jonathan Schenk

M: (415) 531-8728 EVP, Business Development and
Partnerships
craig.w.schleicher@pwc.com
M: (917) 701-2200
linkedin.com/in/craigschleicher jschenk@autofi.com
@CWSchleicher

Doug Ekizian, Senior Manager Mandar Gokhale

M: (949) 517-8220 CTO and Co-Founder
douglas.c.ekizian@pwc.com M: (650) 421-3034
mandar@autofi.com
linkedin.com/in/dougekizian
@DougEkizian

About PwC’s Consumer Finance Group

PwC’s Consumer Finance Group is composed of more than 140 professionals across the country focused on
consumer lending, which means we are at the forefront of the industry working with our clients to anticipate,
understand, and resolve emerging issues. We regularly publish thought leadership, speak at industry conferences,
and execute benchmarking studies to share our perspectives and help our clients think differently about the issues
being faced in today's ever-changing lending environment.
To learn more: pwc.com/consumerfinance

About AutoFi
AutoFi is the first point-of-sale financing product for automobile e-commerce. AutoFi’s software connects a
network of lenders, OEMs, auto dealers, and online marketplaces, providing a seamless plug-and-play financing
solution to existing online auto platforms, powering the purchase from application to closing.
To learn more: autofi.com

©2016 PwC. All rights reserved. PwC refers to the US member firm or one of its Additional thanks to focus group participants
subsidiaries or affiliates, and may sometimes refer to the PwC network. Each and the following contributors from PwC:
member firm is a separate legal entity. Please see www.pwc.com/structure for Jacquelyn Studdert, Kevin Gonzalez, and
further details. This content is for general information purposes only, and should Charles Bruen.
not be used as a substitute for consultation with professional advisors.