With competition for auto lending heating up, Chrysler Group wants to speed up the time it takes to approve purchases.
Peter Grady, Chrysler’s vice president of dealer network development and fleet operations, said the industry-wide average for the approval process is almost four hours, and that this is a “big dissatisfier” with customers, a Chrysler spokesman confirmed.
The U.S. automaker, which last week said it was forming an auto-financing venture with Spain’s Banco Santander, may try to cut the time in half, Grady said.
Grady's comments, made at the National Automobile Dealers Association convention on Feb. 9, were originally reported today by Bloomberg.
The executive said Chrysler Capital, the service that Santander Consumer USA Inc. will create to finance car and light-truck purchases and leases, may set up a full online approval process for customers to use before they visit a dealership.
Grady's comments come as auto sales have been rising and competition for financing these pruchases is heating up. In the Federal Reserve's latest senior loan officer survey, released last month, responses from domestic banks indicated they had again eased underwriting standards on auto loans over the past three months, including lengthening the maximum terms of loans downpayment requirments.
Reducing the time it take to approve a car purchase could help Chrysler better compete with other lenders.
Jeremy Anwyl, vice chairman of of auto Edmunds.com, the online car buying guide, said it typically takes very little time for consumers to obtain financing for the purchase of a vehicle. What can be time consuming, according to Anwyl, is the paperwork consumers must fill out before they can complete a purchase. This can take a single buyer one hour to complete; if there's a bottle neck in the dealer's finance and insurance office, a often happens on a busy Saturday morning, a buyer can easily wait three or four hours, he said.
"There's huge room for improvement in terms of streamlining of the process."
Chrysler said last week it agreed to make Banco Santander's U.S. unit its preferred lender for auto loans. Chrysler, which is majority owned by Italy's Fiat SpA, said its dealers and customers will continue to work with the automaker's current preferred auto lender, Ally Financial Inc, at least through the end of their contact, which expires April 30.
Grady told Bloomberg that Chrysler selected Santander in part because of its expertise with so-called automated decisioning, which uses data modeling to speed the assessment of loan applications and set appropriate terms for the borrower. The auto executive said Chrysler decided against purchasing a stake in its venture with Santander because the automaker’s credit rating would have increased Chrysler Capital’s borrowing costs. His comments were confirmed by a spokesman.