SACRAMENTO, Calif. - If the saying is true that time is money, then it was never truer than now as consumers increasingly rely on the Internet to research and apply for car loans. Time is always of the essence when it comes to approving or turning down an application for a loan, but never so much as when it comes to online lending. At the click of a mouse, an applicant can switch from one Internet lender and access another who has faster online decisioning power. With so much loan dollars at stake, is it any wonder that the pace of alliances between dot.com companies and financial service providers continues at a frenzied pace? While the competition for consumers' online borrowing dollars continues, credit unions are also in the ring sparring with the other contenders. Fifty-five percent of Americans who buy a vehicle this year will use the Internet at some point in the process, according to J.D. Power and Associates, and that figure is expected to increase to 80% by 2003. Online Internet transactions are increasing even faster - nearly 3% of new cars were sold through the Internet in 1999. Consider this: Autobytel.com, which holds nearly 50% of online vehicle sales, topped $3.4 billion and over 3 million users for first quarter 2000 car sales. A company subsidiary, CarSmart.com, the online carbuying service for 200 credit unions, has joined with Creditland and eCoverage and created an online auto buying service, LookSmart Auto Center, that allows car buyers to research, get price quotes and buy and sell vehicles nationwide. But there is a caveat to this news: AnyTime Access, a leading provider of outsourced credit origination solutions to financial institutions, estimates that somewhere between 60 to 70% of applications processed over the Web can't be approved because of the lending institution's criteria, said Peggi Wood.. Considering credit unions' tight lending requirements, that translates into a considerable potential high volume of loans dollars that credit unions can lose to other online lenders if they don't have online lending services. Wood said AnyTime Access' recently announced alliance with Calender.com, an Internet vehicle financing provider was designed with time on their minds. Instead of waiting up to three days for auto loan decisions, Calender.com's clients who apply online and meet the automated underwriting criteria of their financial institution receive a decision on their application in about 90 seconds. Driving the faster turnaround time is AnyTime Access' fully-automated Internet lending tool, AnyTimeLenderT. The technology allows the company to incorporate a financial's lending policies into the system and ensures that loans that are underwritten are consistent with the regulations and policies of the respective client. Applications that don't meet the automated criteria are reviewed by an AnyTime Access loan officer in the company's call center. "Online lending is all about speed and efficiency, and we want to give credit unions the opportunity to compete for and recoup some of the vehicle loans they might otherwise lose to other financials actively participating with online lending," said Wood. The pairing of speed and efficiency was top of mind in a deal reached earlier this month between Pentagon FCU and CarsDirect.com. As a result of the arrangement, PFCU's more than 400,000 members worldwide will be able to research, configure a loan, buy, finance, warranty, insure and arrange for delivery of a vehicle all online, without ever visiting a dealer. The alliance is a boon for PFCU members many of whom are members of the military and find themselves in the position of returning to the U.S. from overseas without a set of wheels. Leveraging the alliance, all the PFCU-member has to do is apply to the credit union for financing, select the car and add-on features and place their order. CarsDirect.com does the rest of the work, including finding the car from its network of more than 2,000 dealers for the member's asking price. CarsDirect.com arranges for deliver of the car and keeps a small fee-ranging from $50 to $200-for itself. Forrester Research, Cambridge, Mass. described the online car sales market as having four distinct phases - general research, dealer selection, payment plans and insurance, and sale completion. Consumers tend to be slow to move beyond the first two states until they gain confidence in online transactions. That is where credit unions' education of their members comes in and helping them reach a comfort level with online lending. -
ekingoff@cutimes.com
