A direct‑to‑indirect strategy that speeds deal‑making and safeguards against flipping.
Transcript:
00:00:05
And we’re back.
00:00:06
Welcome to the next episode of Small Bites.
00:00:09
I’m Greg Payne, Marketing Manager with Cox Automotive, and I’m joined as always by Andy Mayers, AVP of Dealertrack Lender Solutions.
00:00:17
Now in this episode, we’re going to be going in depth on a solution that has a fairly ambiguous name: Lender Referral.
00:00:24
I know I’m not alone in asking this.
00:00:26
Who exactly is Lender Referral referring to, and to whom?
00:00:30
Great question.
00:00:31
What we call lender referral today is a product that’s evolved as the industry has changed. Consumers want to do more online, as you’ve shown us in your studies.
00:00:44
What’s really interesting is how many people are willing to go to a lender’s website to get financing done before they go elsewhere.
00:00:52
Lender referral allows a lender to take a pre‑approved customer, deliver them to a dealer, and secure financing—helping facilitate that process.
00:01:06
It turns a shopper into a buyer by getting them pre‑approved.
00:01:12
It also drives efficiency for the consumer.
00:01:15
Let’s walk through that experience.
00:01:19
A customer may be shopping, realize they need financing, and decide to work with their bank first.
00:01:27
They might get pre‑approved before stepping into a dealership.
00:01:32
The lender tells them they’re approved up to a certain amount and provides a dealer network that can honor the loan.
00:01:46
That creates efficiency before the customer even walks into the dealership.
00:01:52
We know financing time is a pain point—this helps eliminate it.
00:01:57
Lenders also benefit by strengthening relationships and creating cross‑sell opportunities.
00:02:05
Consumers may already have banking relationships that lead to loan offers.
00:02:18
That’s a win for the consumer, the lender, and the dealer.
00:02:29
Dealers receive customers who are already qualified.
00:02:31
It’s truly a win‑win‑win.
00:02:37
The process itself is simple.
00:02:39
Once approved, the customer brings their information to the dealership.
00:02:48
The approval is retrieved and presented with all relevant details.
00:02:55
The dealer adds the vehicle, submits it for final approval, and moves straight to digital contracting.
00:03:06
One benefit is that the loan structure is locked down.
00:03:16
Studies show dealers typically won’t flip the loan when profitability is maintained.
00:03:25
This process reflects where the industry is headed—online financing.
00:03:33
It’s still an indirect contract, but it originates digitally.
00:03:41
We’ve seen great success with lenders already using it.
00:03:44
It’s also a strong service for dealers bringing in pre‑approved customers.
00:03:50
We believe it’s performing very well in the market.
00:03:58
Consumers want to shop and get approved online.
00:04:05
If they want to work with their lender first, why not bring that service to the dealer?
00:04:09
That’s lender referral.
00:04:11
It balances risk and competitive advantage for lenders.
00:04:17
It checks both boxes.
00:04:21
This transitions nicely into our final Small Bite topic: creating a fully connected and streamlined purchase transaction.
00:04:30
It’s all about the journey.
00:04:33
Speed, automation, and technology driving the online car‑buying experience.
00:04:44
All while maintaining dealer and lender profitability.
00:04:54
We’re excited about where the industry is going.
00:04:59
We want to partner with our lenders to get there.
00:05:01
If you have questions, connect with a lending solutions expert.
00:05:08
Andy, thanks for your continued partnership.
00:05:12
And thank you to our audience for tuning in.
00:05:17
Join us next time as we wrap up the Small Bite series with contracting services.
00:05:22
If you have questions about lender referral or related topics, reach out to a lender solutions expert.
00:05:30
Until next time, have a great day.
