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Sarah Jackson, Sales Director, Equiniti Pancredit, explains how new e-signature technology is helping dealerships close motor finance sales in minutes, gaining a competitive edge by enabling customers to drive away on the same day.
The first half of 2017 is looking tough for new car dealerships. According to one recent BBC investigation, nearly one in five new cars entering the UK is now pre-registered; a practice that enables dealers to ‘buy ahead’ in order meet manufacturers’ sales targets. Pre-registration isn’t for the faint hearted; it ties up large amounts of dealership revenue in forecourt stock and requires dealers to take on all the risk associated with selling at ‘nearly new’ discounted prices, often 20% or more.
Dealerships are also feeling the pressure from the weakening pound. In January, the head of the Society of Motoring Manufacturers and Traders (SMMT) warned that the UK should expect new car prices to start rising ‘within weeks’ following the currency’s Brexit-driven slump against the Euro.
With over 80% of new (or nearly new) private car registrations being bought on finance - a sector worth more than £37bn to the UK economy - dealers are going to have to work harder than ever to promote the affordability of motor finance deals. Plenty of potential customers will struggle to see past a jump in a vehicle’s list price, even though comparatively few will ever end up paying fully for the vehicle they’re looking to buy.
These factors are likely to raise anxiety levels on both sides of the deal. As a rule, anxiety breeds indecision and indecision inhibits sales. With this in mind, dealers will need to do their utmost to capitalise on the stirring excitement we all feel after a test drive. After all, it is in these fleeting moments that our reservations evaporate and we picture ourselves as new car owners. Anxiety is replaced by enthusiasm, reluctance by eagerness, caution by spontaneity.
Historically, however, closing a finance deal at this point hasn’t been possible for everyone. Instead, the dealer must sit the customer down to work through the finance application process, printing and signing documents destined for the Royal Mail, and watch as their customer walks out empty handed. For many, the length of time that it conventionally takes for a finance offer to be approved is more than long enough for the customer to reconsider and the deal to fall apart.
Regardless of how persuasive a dealer is, it is hard to argue against the benefits of eliminating the downtime in the finance process. Doing so not only enhances the buying experience for the customer, it also reduces the administrative headaches for both the lender and the dealer too, making the whole value chain work faster and more efficiently.
Thankfully, new electronic signature technology is now enabling dealers to complete the finance application process in the post-test-drive ‘golden hour’, meaning the deal can be closed and the customer handed the keys all in the space of a single visit. When the customer signs digitally, the whole finance application process can be conducted electronically, enabling dealerships to obtain a decision from the lender within minutes instead of days. The prospect of driving away on the same day is more than enough to keep the customer focused, excited and motivated to close the deal.
As the pressure on dealers continues to rise this year, we can expect to see the adoption of electronic signature technology ramp up. In what is shaping up to be one of the most hotly contested finance markets of 2017, this technology may just be the thing that helps dealers get ahead of the competition.