Three Ways Savvy Auto Lenders are Using Analytics

As an auto lender, your ability to pinpoint credit risk means everything. Yet, securely growing your business—and your bottom line—in today’s turbulent economy requires a more nuanced and prescriptive approach. 

It involves building bigger, “real-life” customer views that extend beyond just credit scores. Or knowing when a decisioning strategy isn’t working and having the agility to quickly course correct.  

I know this because I regularly sit down with auto lenders (both direct to consumer lenders and indirect lenders working through dealerships), helping them tackle their biggest pain points regarding credit risk, prescreening, and go-forward market planning. Based on our discussions, one thing is clear: the more you know, the better. 

In this article, I share how I’m seeing today’s savvy auto lenders use Equifax analytics and decisioning to learn more about:

• their customers, 

• prospects, 

• and the larger market.

That way lenders can efficiently solve these people’s toughest challenges.  

Credit risk is a moving target; here’s how to stay on top of it. 

As a lender, you want to take on as little risk as possible. This helps minimize down-the-road delinquencies, collections, and write-offs. However, credit risk is a moving target that can shift with changing consumer behaviors, market trends, and economic cycles. 

Think: the recent resumption of student loan payments, budget-breaking inflation, post-pandemic declines in bank account balances, and more. 

This is why you need to bring in additional data to expand your views. Additional data  helps you better understand current and evolving credit risk. Until recently, accessing third-party data and integrating it with your customer data was a painstaking process that took months or longer. It meant working with multiple providers to get the data. Then keying and linking the data together in one environment before moving it to another for analyses and querying, and yet another environment to deploy your updated insights. 

You might think, “Data and analytics are complicated, so that sounds about right.” 

No. Time is money. 

If you’re not making the best possible credit risk decisions for your auto lending business due to analytic inefficiency and delays, you’re losing money. 

At Equifax, we’re helping auto lenders optimize their decision-making in two unique ways. 

• Know more about your customers with fast, consolidated access to multisource data. Instead of taking months to augment your customer data by working with different data providers, you can access multisource data via Equifax Ignite®, our inclusive analytic solution. It’s fully cloud-based, so you get consolidated, direct access to our market-leading data assets, which provide 100 percent coverage of the U.S. consumer credit population. 

You’ll find traditional credit data plus alternative data to help you better understand consumers who lack credit. You’ll get insight into:

• credit, 

• bankruptcy, 

• ability to pay, 

• income, 

• employment, 

• wealth, 

• and assets. 

You’ll see how people handle their ‘everyday bills’ for cell phones, cable, and utilities which aren’t usually reported to the credit bureaus. The same goes for specialty finance, alternative short-term loans, and more. 

To save you even more time and cut guesswork, we provide you with auto-specific data sets, attributes, and scores that are proven to deliver optimized outcomes for your industry and select use cases, such as prescreening. 

Select the data assets you want, and your data is delivered via the cloud in a query-ready format. “Point and click” to upload your customer file into Equifax Ignite and we can automatically key and link it to our data assets, and you’re ready to go. There’s no need to download the data, restructure it, and store it offline. It doesn’t get any faster or simpler than that. 

• Boost your agility and get to market faster with a built-in decisioning platform. Building and deploying analytic models to market—whether they’re for prescreening, credit risk, collections, or whatever—can be a protracted, sometimes Herculean process (if you know, you know) that puts you behind the market, instead of ahead of it. 

It usually involves building your models in one environment and then moving them into another to be coded. In between, there’s a lot of back-and-forth and approvals. This delays deployment and increases the opportunity for re-coding errors.   

Today’s auto lenders are eliminating these inefficiencies with help from us. Within Equifax Ignite, you can build your model, have your team review and approve it, and then run it through our integrated risk decisioning platform, powered by Interconnect®. Within a single analytic environment, Equifax Ignite seamlessly pumps your selected data into Interconnect Auto Hub to automate and power your credit, marketing and risk decisions. There’s no lifting and shifting; everything is seamlessly integrated and connected. 

But here’s the “a-ha” moment. 

As your decisions are rendered via Interconnect Auto Hub, you can access a feedback loop that’s built into Equifax Ignite. This enables you to analyze your credit decisions and outcomes in real time. You’ll see what’s working and what’s not, as the decisions are being made. Using those priceless insights, you can quickly adjust your models, scores, or algorithms within Equifax Ignite to keep the decisions you make on your auto loan portfolio optimized at all times.

Don’t wait for buyers to come to you; find them first and win their business. 

People are always going to need vehicles. Knowing this, it’s easy to sit back and wait for them to find you. However, a better strategy involves getting on the offensive. 

A targeted, personalized prescreening strategy can deliver a remarkable ROI, send your auto portfolio into the next stratosphere, and help you win repeat customers.

At Equifax, we’re helping auto lenders build high-performing prescreening models that uncover unique prospect audiences and opportunities within their existing customer base.  

• Meet buyers wherever they are (in life) with personalized offers. It’s hard to get away from credit data in auto lending, but prescreening is different. It requires more. You want to know their estimated income and employment status. You need a gauge of their overall projected financial health, wealth, and assets. Their household composition and more. 

It’s also great to know if they’re currently leasing a vehicle or making regular auto loan payments. How soon before they pay it off? Are they currently in the market for a new vehicle? 

We can show you all these things with our vast selection of anonymized consumer economic data. It includes expansive coverage of:

• estimated consumer assets, 

• income,

• affluence, 

• spending, 

• financial durability (the ability to continue spending amid a financial downturn),

• aggregated credit, 

• and more. 

You can slice and dice the data however you like to identify your ideal customer. This allows you to discover new prospect audiences such as first-time buyers. Then, simply download your insights from the cloud and use that data to build a targeted and “right-timed” prescreening campaign. With a fine-tuned audience in hand, you can take the extra step of personalizing your outreach based on household demographics, vehicle preferences (luxury or economy, truck or sedan, etc.), a recent auto loan payoff, and more. 

This works with prospects and also with your existing customer base, which is a great place to upsell (based on a customer’s improving financial health and affluence) and look for new opportunities. 

It’s a proactive approach that piques their curiosity and nudges them to get in touch either online or in person at the dealership. Regardless, it’s better than being that irritating auto lender who sends great offers to people who just bought a new car, which is a waste of money and highly annoying to many consumers. 

Keep your decision-making optimized (and profitable!) amid sudden market pivots. 

This is a big one. In the past 20 years, we’ve seen two recessions and one market-rattling pandemic. 

Here’s my question to you: Have sudden or subtle economic shifts ever blindsided you to the point that your lending decisions cost you money? 

At Equifax, we’re using our data and analytic capabilities to help ensure that you never have to worry about that again. 

• Recognize and learn from historical trends faster. It’s important to have a lending strategy that’s grounded in historical data. One that helps you understand and better anticipate the impacts that emerging trends may have on your lending strategy. 

But accessing that historical data can require a lot of time and resources. You can either sort through your internal data or manually request the data from a third party. In short, it can take weeks or more just to access the data, if it’s even available. 

Here at Equifax, we reconfigured our solutions to solve this issue. That's why today, we can put historical data in your hands faster with our archived data on demand via the cloud. 

Instead of waiting weeks to compile the historical data needed to validate models and adjust your strategies, you can shrink that timeline to roughly 24 hours. 

You get on-demand access to nearly 20 years of archived data, plus you get access to our consumer data for the requested dates and/or geographic locations. That means you’ll get a ton of new data types, attributes, and features that you may never have considered using before.  

From validating your current models to experimenting with new go-forward strategies, you’ll have the historical data you need—always at your fingertips—so you can make smart adjustments before fast-moving market conditions impact your business. 

• Adjust your decisioning strategy on the fly. When economic conditions are quickly deteriorating (or improving), you need the ability to clearly see what’s happening so you can act fast. Unfortunately, as a busy auto lender, you sometimes don’t notice until it’s reflected in your bottom line. 

This is when the all-inclusive aspect of Equifax Ignite offers a huge competitive edge. It gives you instant visibility into fluid customer behaviors by returning the outcomes of your analytic decisions via a direct feedback loop that’s built into Ignite. You’ll see when acceptance rates, delinquencies, defaults, and write-offs are inching up or down. Based on your learnings, you can make quick adjustments to your analytic models and scores using the Interconnect Auto Hub decisioning platform—also accessible within Equifax Ignite—to keep your strategy aligned with the latest trends and consumer behaviors. 

To reiterate, you can do all this for one reason. Everything you need—multisource data, analytic tools, a direct feedback loop, and a risk decisioning platform is accessible within the Equifax Ignite cloud-based environment. There is no juggling different reports or analytic platforms or systems. 

You can access your entire analytic environment with unprecedented ease and transparency. No silos. No obstacles. 

This will help you make quick decisions based on the latest data. You will be able to react to changes in the auto industry and the market as they happen. 

As an auto lender, you need to know one thing about your prospects and customers: more. More about their creditworthiness. More about their payment behaviors. Their wealth, lifestyle, and affluence. Their ability to spend and likelihood of buying. This knowledge begins with fast, direct access to the right data. Yet, that’s only the start. You also need to be able to quickly analyze that data and use those insights to keep your lending strategy profitable. Your decisions need to reflect current customer needs and market trends. 

At Equifax, we help auto lenders do all these things and more every single day, and we can help you too. Get in touch today to learn more about Analytics and Decisioning Solutions.