TransUnion, in partnership with the CarNow digital retailing and communication platform, is launching a new digital, indirect-lending solution to be marketed to auto lenders, called Auto Payment Shopper.
Online shoppers can use Auto Payment Shopper to pre-qualify for an auto loan for a specific vehicle that’s in stock, at a specific monthly payment, says Satyan Merchant, senior vice president and automotive business leader at TransUnion, the Chicago-based credit bureau.
“Auto retail shopping and obtaining financing are converging. That’s really a consumer push, a consumer demand,” he says.
“The retail experience for nearly everything else a consumer buys online is seamless, integrated and quick. We believe auto retail is on the precipice of achieving that. Consumers are demanding it, and lenders are going there,” Merchant says.
The system relies on TransUnion’s consumer credit-history data – to use the system, consumers have to agree to a credit check. Participating lenders furnish their approval criteria, and the lenders’ dealers provide updated inventory data.
The net result is to provide a realistic loan amount the consumer qualifies for, for the specific vehicle they’re considering, Merchant says. Without a realistic idea of what they can afford, many online shoppers drop out of the online process of exploring financing, he says.
Using Auto Payment Shopper, online consumers also can enter different deal structures, such as shorter or longer terms, or a higher or lower monthly payment target, to see how that affects their pre-qualification. The system can also assign a realistic trade-in value if there’s a trade-in, TransUnion says.
The system behind Auto Payment Shopper could be capable of concluding a complete retail transaction including financing, but the more limited aim right now is to provide pre-qualification that consumers could take to a dealership, Merchant says.
TransUnion is looking for lenders to participate, he says. Like the vast majority of auto lending, Auto Payment Shopper is still indirect lending, where lenders buy retail installment sales contracts from dealers, as opposed to direct-to-consumer lending, Merchant says.