Dealers Discuss How They Choose Lenders

Register now

Interest rates aren't just king with consumers-they're king with auto dealers, too, according to a survey of dealerships on how and why they choose their indirect lending partners.

GrooveCar, Inc., a provider of indirect auto lending services, canvassed more than 200 auto dealerships in the metro New York region to determine the top five reasons why one lender bests another, particularly when a credit union is involved. The answer: rates, rates, rates.

While 54% of the respondents opined that rate matters the most, almost all included it in their top three. The actual time to submit an application and receive a final disposition from the lender rated second, while the "advance"-the dollar amount a lender is willing to commit on a particular vehicle-ranked third.

Further down the list in the decision-making, but equally important to dealers were fewer stipulations, followed by the quality of the relationship and ease of contacting and communicating with the lender via a dealer/credit union interface or telephone.

"Interestingly, the results showed that used car dealers were more concerned about the 'advance' and 'fewer stips' (stipulation) than turnaround time," explained GrooveCar President David Jacobson. "This relates to credit quality. A dealer will wait longer for a credit decision on a poor credit applicant. Why? Because there is less competition for the lender. Therefore, the dealer will wait."

For info: www.groovecar.com.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER