Why Fast Time to Funding is Key for Prime and Super-prime Auto Finance

Lightico’s recent State of Digital Lending in Auto Finance survey of 1,054 Americans found one common trend: auto loan borrowers are frustrated by excessive paperwork and the resulting lengthy time to funding that results. While all demographic groups want a fast and digital loan application process, one group stands out from the pack when it comes to expectations for a speedy experience: high income individuals. This demographic is closely associated with prime and super-prime credit scores. With 20% of Americans in the super-prime category and 41% in the prime category, the market potential is huge — yet lenders are losing these groups due to archaic originations practices.

Prime and super-prime auto customers are also Amazon Prime customers

America’s high-income individuals have more disposable income to spend on desirable services. In today’s parlance, desirable nearly always goes hand-in-hand with convenience and speed. Nothing better exemplifies this type of service than the Amazon Prime membership service. Subscribers enjoy one-day or even same-day shipping, as well as video on demand and cloud storage space. According to Business Insider, 63% of the highest income earners subscribe to Amazon Prime, compared to just 32% of the lowest income earners. So it’s little wonder that wealthier (typically prime or super-prime) Americans have transferred these expectations for seamless and fast service onto every area of their life. And the auto loan application process is no exception. Lightico’s survey found that higher income individuals (defined as having a household income of over $85,000 a year) are 18% more likely than lower income individuals to expect to complete their auto loan applications in a few hours or less.

Time to funding is taking too long

While many lower income borrowers are saddled with greater documentation requirements and longer time to funding, higher income individuals are not spared. The Lightico survey found that 29% of higher income borrowers experience a time to funding that takes longer than three days. And 33% of them still have to submit over six forms and/or documents to complete the process. This encumbrance is critically out of step with their expectations. Lenders must remember that higher income goes hand in hand with higher expectations for turnaround time.

The cost of long time to funding with prime and super-prime customers

Prime and super-prime customers aren’t just frustrated when they encounter lengthy paperwork processes. In many cases, they abandon the process altogether. The Lightico survey found that many high-income earners have abandoned an auto loan process with their lender because of archaic funding processes. When asked why they abandoned, this group overwhelmingly cites it “took too long” as the primary reason (49%). In addition, 16% claim the necessity to go to a physical location (such as a bank or dealer) is the reason. Another 12% put it on the requirement to fax, print, and/or scan documents. It’s notable to remember that all these additional issues directly contribute to lengthy time to loan completion.

Go digital or go home

The best antidote to high customer expectations from prime and super-prime borrowers is to give them what they want: a faster turnaround time for loan completion, and a paperwork-free experience. Today’s best digital frontend solutions allow borrowers to complete all their forms, esign, and submit all their documents and ID from a single digital channel. To capture the prime and super-prime market, lenders must digitally streamline their origination processes.