UK Car Lending

Auto financing is going digital, and that’s a good thing for everyone

Covid-19 has impacted virtually every industry around the world, and the auto finance industry is no exception. Although demand for cars remained strong, global supply chain issues have caused car sales to fall by more than 15% in the past 12 months.

These global supply chain issues have led to a shortage of new cars and a spike in the price of used cars. Used car prices would be 36% higher than before the pandemic, and these prices are not expected to return to normal until mid-2022.

It has also led to dramatic changes in the way people buy, finance and insure cars. With greater data availability and technological advancements, experiences on the Internet have become more personalized. But auto finance has been left behind, particularly in Australia, a market that has lagged behind places like the UK and the US.

Forced adoption

Covid-19 was the catalyst that forced many industries to go online, a shift that benefited new players ready to deliver online and personalized experiences.

Such a fintech, Drive, uses proprietary loan matching technology to provide clients with a fully personalized loan experience with a digitized and streamlined online borrowing journey.

Companies like Driva are leading the charge in the rapid shift to buying cars online and helping to define what buying a car looks like in the digital age.

We’ve created Driva, an easy-to-use online platform that makes financing your next car simple. With just a few clicks, you’ll receive pre-approved loans from over 30 Australian lenders – try it today!

What does going digital really mean?

The growing adoption of online processes in the Australian automotive space means that suppliers have more access to data than ever before.

That means they’re able to deliver more personalized and streamlined experiences, and it’s easier than ever for consumers to make sure they’re getting a good deal.

We have detailed below what this means in practice:

1. Loan Matching Algorithm

Driveva’s AI-driven platform uses proprietary credit models to match customers with loan options based on thousands of lender data points. For consumers, this means completely personalized rates that will not change later in the process. In contrast, traditional brokers and lenders often use attractive generic starting rates which are likely to increase once a full credit assessment has been completed.

This algorithm makes it possible to accurately compare personalized financing options from multiple lenders in one place, which would be impossible in the offline world.

2. Innovative data sources

Driva’s innovative application process categorizes consumer bank statement data, allowing them to match customers’ income and spending habits against thousands of lender policies to find their best deal.

They also use third-party data sources such as the ATO or pension funds to verify income, instead of more traditional methods such as physical copies of payslips.

For consumers, that means fewer trips to the bank to get copies of your bank statements or calls to your employer to get PDF copies of your payslips.

3. Integrations with digital partners

Like many other technology companies, Driveva leverages the power of application programming interfaces (APIs) to offer more than just a financing solution.

Through API integrations with various third parties, Driva not only allows you to finance your next car online, but also to buy the car itself through Driva’s online network of used car selling partners.

For many, that could mean ditching weekend visits to the dealership in favor of virtual 360-degree inspections on the Driva platform.

How does this benefit consumers?

As finance moves online, companies like Driva can use their advanced AI-powered platform and access data to provide customers with a more streamlined, unified, and fully personalized solution. That means convenience and, in some cases, thousands of dollars in savings.

How does this benefit partners?

As finance becomes increasingly complex and increasingly regulated, fintechs like Driva, which focus on a digital finance experience, have eased the regulatory and time burden on dealers and other online partners.

For dealers, this means they can focus on what they do best: buying and selling quality vehicles.

It can also increase a dealer’s bottom line, resulting in much higher financial penetration (the proportion of cars sold on finance). Historically, dealers have only sold 30% of their cars through finance, even though 90% of new cars in Australia are purchased through some form of finance.

Thanks to the Driva financing solution, dealers have been able to achieve a financial penetration of more than 50%, which means more sales and more financial income.

The world of auto finance is rapidly moving into the digital realm, and this transition is good for customers, lenders and dealers. Not only does this make financing more transparent and affordable for customers, but it also opens up a host of new opportunities for dealers.