Aaron Bickart is general manager of OfferLogix. All opinions are the author’s own.
Artificial intelligence is transforming every corner of the financial world, and automotive lending is no exception. From instant credit approvals to algorithm-driven interest rates, AI is reshaping the way dealers and lenders interact with customers. On the surface, this looks like a win: faster approvals, streamlined processes and more profitable lending portfolios. But beneath the speed and efficiency lies a critical question: Are we losing the human element that ensures fairness, nuance and trust in the auto financing process?
The rise of AI in automotive lending
Dealers and lenders have embraced AI because it reduces friction in the financing process. Algorithms can instantly predict whether a customer qualifies for tier 1, 2, or 3 financing. That means no waiting for underwriters to review an application, no stacks of paperwork and no lengthy back-and-forth. For lenders, the upside is clear: faster decisions and improved profitability.
But the trade-offs are becoming harder to ignore. AI-driven credit models don’t always capture the full story of a customer’s financial behavior. For example, a buyer may have an impeccable record of paying off car loans on time but could be penalized heavily for missing a single credit card payment years ago. In a human-led underwriting process, that nuance might have been recognized. With AI alone, the applicant is bumped to a higher rate tier, with no opportunity to explain or appeal.
No room for negotiation
Traditionally, dealerships had relationships with underwriters. When a borderline customer came in, a finance manager could pick up the phone, provide context and often secure a better rate for the buyer. That flexibility is disappearing. With AI in control, there’s no one to call.
What’s more, lenders leveraging AI models are no longer required to publish standard rates. That means consumers can’t easily benchmark what a “good” rate should look like. Instead, each rate is generated dynamically by the algorithm, creating a marketplace with less transparency than ever before.
As interest rates climb across the board, this lack of visibility only compounds consumer frustration. Buyers may feel they’re at the mercy of a “black box” decision – hardly the kind of experience that builds trust.
Efficiency at a cost
There’s no denying the advantages of AI. For lenders, it’s more profitable. For dealers, it reduces wait times and accelerates closings. For consumers with spotless credit histories, the process is seamless.
But when it comes to edge cases – the customer recovering from a divorce, the entrepreneur with fluctuating income, the driver with a spotless auto loan history but a ding on a credit card – AI’s rigidity becomes a liability.
As fintech thought leader Brett King has said, “AI is great at crunching numbers, but it’s not yet great at understanding context.” In credit decisions, context is everything.
The human element matters
That’s why I believe the future of automotive lending is not AI versus humans, but AI and humans. AI should handle the heavy lifting – analyzing data, scoring risk and streamlining approvals – but we still need human judgment to catch the nuances that algorithms miss.
Regulators have raised similar concerns. The Consumer Financial Protection Bureau recently warned that lenders relying solely on “black box” AI systems could unintentionally discriminate against certain borrowers if their models lack transparency or override opportunities for human review.
Restoring the human element to the process doesn’t mean slowing everything down. It means creating a hybrid model where AI provides the baseline decision, but underwriters and finance managers have the authority to step in when the data doesn’t tell the whole story.
A path forward
For automotive lending to remain both profitable and fair, the industry must embrace a balanced approach. Dealers need a voice in the process, consumers need transparency on rates and lenders need to ensure AI is not the sole decision-maker.
As I often tell my team, technology should empower, not replace, human judgment. AI can predict probabilities, but people understand possibilities.
In an era of rising rates and shifting expectations, that distinction could make all the difference – not only for the health of the automotive lending ecosystem, but also for the trust between consumers, dealers and lenders.
