The Future of Auto Finance From a FinTech Lending Perspective 

Fintech has completely changed the way people access credit, and auto lending is a major part of that process. Dealership financing, which was once the norm, is almost getting phased out as FinTech startups, banks, and even dealerships offer customers faster approval, more choices, and better terms. Auto finance players who want to continue winning more business must embrace change.

Consumers Want Change

Truth be told, the auto financing system hasn’t kept up with technology and consumers are becoming increasingly frustrated. PwC has been critical about the lack of personalization, too much paperwork, and dealers who withhold crucial details from customers. 

Most auto dealers understand the vital role of a digital presence. However, they still don’t offer online financing for fear it will make comparisons easier and eat into their profit margins. But they have to give in to consumer demands at some point because technological advancements are making it difficult for them to keep resisting.

The Fintech Model 

Online direct lenders, like those who give fast cash loans, started disrupting other credit markets long ago. And now, the long-awaited change has made its way to auto finance. The FinTech lending model is all about convenience, speed, and higher approval rates.

Research has shown that FinTech lenders significantly reduce loan processing times, which means faster approval rates. And higher approval rates don’t have to mean higher interest rates. And even when car buyers feel that the interest rates are too high, they still prefer those rates to outright rejection. 

Lenders who arrived early in the market got a great opportunity to win the market share. Once consumers visit online auto finance websites and see how easy it is to get a loan, they never go back to dealership offices.

Well-Built Cars, More Financing Options

The auto market has been revolutionized by well-built cars that last longer. Modern cars last much longer than their outdated counterparts. Automakers used to offer lower interest rates to push new cars, but used cars now present a level playing field. The average age of cars on the road is 11 years. 

A regular auto loan takes 6 years to pay off, which is the average time people keep their cars. Newcomers to the auto finance space can only make significant gains if they apply the fintech model of more straightforward and faster applications.

Change Is Inevitable

The world of auto finance has been positively impacted by many things:longer-lasting cars, ride-sharing apps, and fintech lending. Auto dealers who want to increase their profit margins must start providing the online financing options that consumers want. 

Online lending has changed and lenders are now challenging auto manufacturers and dealers who offer car financing. The used car market has become dominant as the build quality of vehicles has improved. 

The introduction of ride-sharing apps and self-driving cars has also moved the market to fleet sales financed by big financial institutions. Online lenders now have an opportunity to use technology to take the market share from established competitors.