1. The automotive industry seems to be one of the last to the party when it comes to technical disruption. Why is that, and are consumers really ready to finance their car on their phone?
The internet has really changed the auto industry in the last few decades by commoditizing vehicles and making pricing information available to customers anytime and anywhere. In many cases today, customers know exactly what they want before physically going to the dealer because they’ve done their research online. Yet, the dealership has historically been in control of consumer financing.
40 million people will buy or sell a car this year and 70 percent of them will go to the dealership to do it, losing thousands of dollars in the process. Why? Because sellers need an easy way to pay off their loan and buyers need an easy way to get a loan.
But in nearly every industry and more recently in the auto industry, middlemen have been cut out in exchange for self-service and peer-to-peer technology solutions. People are ready to take control of financing a car themselves using technology just like they do with vacation rentals, home mortgages and even home sales. If you think about the complexity of the real estate industry and the way consumers have embraced technology’s disruption of that market – with Zillow, Trulia and others – using a mobile phone to buy, sell and finance cars is a no-brainer.
2. Why is this kind of lending a better alternative than what’s already available through auto dealers, banks and credit unions?
There is a rising demand for convenient lending solutions that put the customer in control. This is a better alternative for consumers because financing is integrated directly into the purchase process, providing transparency while people shop for vehicles and simplifying the customer experience. Technology also enables an efficient, low-overhead model for lenders and those savings can be passed on to consumers.
Blinker brings this to life with the snap of a photo, allowing anyone to instantly get pre-approved for a car loan. Customers simply snap a photo of their ID to get financing, viewing loan options right on their phone without affecting their credit score. That means people no longer have to go to the bank or dealership, speak with a representative and fill out paperwork to get a car loan. We use our patented process to allow people to finance cars themselves – saving them time and money.
3. What can traditional lenders learn from this market disruption-in-progress?
There’s a new level of expectation in working with retail customers. Banks are not just being compared to other banks anymore. They’re competing with and being measured against all other retail and digital experiences. People value speed, efficiency and security, but still want to be able to trust that they are getting good value. Being in control of the process is a huge element that is totally absent from traditional loan processes.
As consumers continue to adopt digital and fintech solutions, traditional lenders must evolve and embrace the digital transformation and simplified customer experience to remain competitive in the market. Banks and other traditional lenders need to be where customers are, streamline the process, eliminate paperwork and automate payment.
4. What’s next in the auto finance space? Is there enough room in the market for traditional and fintech lenders?
Like other industries, the auto market will continue to be transformed by technology and by a people-focused approach. With over a trillion dollars in outstanding auto loans, there will be room for the competitors that embrace the new standard in retail interactions: giving consumers control, making the transaction simple and transparent, and eliminating clunky elements of an antiquated process.
At the same time, lenders are still regulated, and it serves both lenders and their borrowers well to make terms, disclosures and agreements as user-friendly and transparent as possible.
Danny Martinez is the president of Blinker, the first-ever mobile app that allows anyone to buy, sell, finance or refinance cars themselves, without going to the bank or dealership. Using patented, image-recognition technology, users can list their car for sale, apply for a new loan or refinance their current loan, all through the app.