Outside of their home, or their children’s education, their car is most Americans’ largest purchase.
But when it comes to making that purchase, many would-be customers run up against two big obstacles: a lack of transparency around financing solutions, and outdated software first launched in the previous century.
“Consumers go to dealerships and pick out a car, they go to the finance office and it’s non-transparent,” Joshua Tatum, co-founder and CPO at CarPutty, told PYMNTS. “Most consumers don’t know what their buy rate is, what the sale rate is.”
He added that the existing software in the market, largely developed in the 1990s, lacks data-driven capabilities and remains on-premises, despite the auto industry’s multitrillion-dollar scale.
But the potential for greater digital disruption in the auto finance sector is being realized by the marketplace, with solutions reshaping how consumers purchase vehicles, how lenders assess and approve financing, and how the entire customer journey is managed.
Advancements within auto financing are part of a larger trend of technological disruption across various lending sectors, as the power of digital technology enables more streamlined experiences across financial services touchpoints.
“Traditionally, auto finance was transaction based. You want a car, you go look for a car, you buy a car, then you have to finance the car,” Tatum explained.
He added that CarPutty’s auto financing solutions redefine how consumers approach car financing by providing a line of credit based on the individual’s financial profile rather than the specific car they intend to purchase. The line of credit allows consumers to finance multiple vehicles, refinance existing ones, or buy out leases.
“It is a very malleable financial product for the consumer to have, that they control,” Tatum said.
And the integration of digital tools is not just a fleeting trend but a fundamental shift in how financial services are delivered and experienced. Concurrent innovations like artificial intelligence (AI) and machine learning are also enhancing underwriting and embedded lending processes. By analyzing consumer data, these technologies offer personalized loan products that better meet the needs of individual borrowers, improving customer satisfaction while reducing the likelihood of defaults.
Tatum explained that CarPutty’s own V3 tool, which stands for valuations past, present, and future, uses AI to give car owners greater insight into the value of their vehicles.
By analyzing tens of thousands of data points per vehicle identification number (VIN), V3 provides real-time and predictive valuations. Consumers can track their car’s current worth, historical value, and projected future value, transforming how they view their vehicles.
“It makes the consumer look at cars as assets versus depreciating assets,” Tatum said. “When the tires wear out, people can now make an informed decision on when to offload their car.”
Data from the February/March installment of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report“ revealed that for many consumers, car costs are a key concern. The study’s survey of more than 4,200 U.S. consumers found that 27% said vehicle-related expenses had a high or very high impact on their budget in the last year.
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While many of today’s digital solutions focus on enhancing the consumer auto experience, they also can provide benefits to dealerships including valuable data on consumer behavior.
“We provide them actually what the consumer is doing with their car,” Tatum said, noting that CarPutty customer dealers are given access to a private portal that can help with retaining customers and identifying potential sales opportunities.
And there is a new cohort of digital natives interested in purchasing a car. PYMNTS Intelligence in the April edition of the report “Why 60 Percent of Gen Z’s Live Paycheck to Paycheck“ revealed that 11% of Generation Z consumers cited buying a car as their top financial goal.
As dealers and consumers alike embrace digital innovation across the automotive finance industry, the data-driven future of automotive financing might just help them reach it.
The post CarPutty Shifts Gears on How Consumers Finance Their Cars appeared first on PYMNTS.com.
