Nowadays, many people no longer buy their car in cash, but finance it. Why not. The choice is large, however, which is why you should definitely compare the offers and you should also consider the digital possibilities that are available to you, and maybe even make use of them. A study, which was commissioned and published on behalf of the banking association in 2019, came to the result that almost two thirds of all installment loans are used to finance a car. Now, of course, the question arises of what is important to customers when financing a car and what banks should consider in order to continue to be successful in the car financing sector.
Many compare loans in advance
According to the SCHUFA credit compass, most people who want to take out a loan for car financing compare the offers that are available on the market in advance. In addition, the number of inquiries regarding the terms of a loan has been increasing relatively steadily for several years. However, this is not about the actual conclusion or the actual application for a loan, but only about the information regarding the conditions that a certain loan offers. For this reason, such inquiries can certainly be used as an indication of the increased comparison of loans. If you compare the numbers from 2016 and 2018, the number of inquiries rose by 11,8 million. The reasons for this are the various advantages that such a loan comparison offers. This includes, among other things, a better overview, the possibility of filtering and ultimately, of course, a possibly cheaper loan. Because of this, it is almost an obligation for companies to show presence at such comparisons in order to be able to reach more customers.
Financing through a dealer as a competitive alternative to applying for a loan through a bank?
If you are interested in a certain vehicle from a trusted car dealer, they usually have appropriate and financially attractive financing on offer. This creates a problem for financial institutions because: Normally, the dealers only cooperate with a single bank. Mostly the bank owned by the manufacturer itself. In order to be able to prevent extensive financing through the dealer, banks must therefore score points with correspondingly attractive conditions in order to still win customers. This means that potential interested parties might first find out about existing offers before concluding financing directly from the dealer.
How does digitization work in the area of car financing?
More and more companies in all sectors are jumping on the bandwagon Digitization on. However, some banks missed this a little, which ultimately results in fewer customers because digitization is now a "trend". Customers want to be able to compare online as well as obtain further information online and ultimately submit the final application. Many are immediately put off if the request is made over the phone or even locally in a branch. Younger customers in particular are used to doing many everyday things online - so why not apply for a loan? Whoever objects of daily life, Tuning parts, Clothes and other purchases online, very likely also has the need to carry out financial offers online and is rather averse to a company that has little or no online presence or that has a very poorly functioning online offer and chooses instead a competing company.
Banks' online presence is essential
In short: A sufficient and functioning online presence of banks is indispensable in order to win customers in the long term and thus to be able to face the financing of car dealers. For this reason, it should actually be standard that an online application form is offered to which an immediate answer is given - technically the whole thing would also be possible (Data comparison regarding creditworthiness). The same also applies to a cancellation. Options that can be used in the context of digitization are, for example Videoident procedure, the digital account view and the so-called digital signature. Among other things, these options facilitate identification (via video chat and ID card), the credit check (Online check) and signing (also online). For the most part, these procedures are fully developed and therefore work very well, are also safe and in this way contribute to a simple and smooth process.
Everything can be done in 24 hours
If the banks really make use of the options, a complete credit process can take place in 24 hours. To a certain extent To have security and thus being able to offer a low price is often done Secured by the vehicle letterwhich, however, results in increased bureaucratic effort. A smart idea for providers would be to leave the decision as to whether to continue with or without collateral to the customer: if the bureaucratic route is chosen, a smaller one could often be the case, for example Interest bonus be granted. But we recommend the vehicle letter not to leave the bank. The reasons for this are spontaneous car sales, an accident with write-off or a simple one Re-registration numerous. If you don't have the letter at home, a lot becomes more difficult.
Car financing is much easier these days
Due to the fact that the financing of cars is often carried out nowadays, a certain routine has emerged, which ensures quick and easy processing. As already mentioned, car dealers, with their sometimes very attractive financing, represent serious competition to conventional credit offers from banks. In order to counteract this, the financial institutions must always become more attractive with regard to their offers. It starts with successful and smoothly functioning digitization and extends to an in Credit application completed in 24 hours. With additional discounts, the chance that loans for cars will continue to be paid out and that the dealer's financing is not chosen could increase significantly in the future.
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