While electric vehicles accounted for just 8% of all U.S. retail car and truck sales in 2024, reported Cox Automotive, they are having an outsized impact on every phase of car ownership, from car shopping, buying, and financing to maintenance, billing and payments. Faced with EV and other new business models and lenders, traditional captive and independent auto finance firms need to ensure their practices and processes remain competitive, including post-purchase billing and payments.
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Some EV innovations challenging the status quo:
- EV-only automakers, led by Tesla, embracing direct-to-consumers (DTC) sales and service and disrupting the role of dealerships, including providing financing
- Digital experiences including virtual reality showrooms and test drives
- In-person test drives, with cars conveniently dropped off at the potential buyer’s home
- EV-only lenders offering EV-specific loans and charging station loans
- Third party and OEM EV car subscription services
- New lending bundles that include charging stations and incorporate federal tax credits
- Consumers searching and applying online for financing earlier in the buying process
As a hybrid approach that counters the DTC push by some EV automakers, Amazon Auto online car buying platform launched in 2024 with participating Hyundai dealerships in 48 U.S. cities. It offers a nearly digital-only buying model, from researching available vehicles, finding all-in pricing with breakdown of charges, choosing a vehicle and applying and obtaining financing through the dealership. Consumers even arrange vehicle pickup online—only needing to drop off the trade-in and pick up the new vehicle in person. Of course, consumers also can choose to mix digital and in-person interactions, such as physical vs. virtual test drives.
Digital demand
A red thread running through most new developments shaking up the auto industry is the decided shift toward digital. Some 76% of EV buyers used digital tools in the buying process, including buying tools for checking inventory, arranging financing and insurance, and researching add-ons including charging equipment, according to the 2024 Cox Automotive Car Buying Journey Study.
Perhaps even more noteworthy is the currently bigger pool of gas-powered buyers that are turning to digital tools. Cox found that 42% of gas-powered car buyers in 2024 used online tools and experiences, including seeking financing, for at least some of the process.
Demand for digital billing and payments
The growing preference for digital interactions extends beyond vehicle purchases to billing and payments–not just for tech-savvy, sustainability-forward EV buyers but increasingly for all car buyers. Consumers want digital and mobile self-service tools and communications throughout the loan term, according to the 2023 survey of 1,465 prospective and existing auto loan customers by Corporate Insights. Top requirements include:
- 79% expect electronic access to their loan/lease details.
- 72% want to view payment history online.
- 70% want electronic monthly statements.
- 65% want digital payment alerts.
This trend is pacing the broader movement among U.S. consumers to electronic customer communications and payments from companies with which they do business. In fact, 77% of consumers prefer to pay bills online, according to the 2024 ACI Speedpay Pulse Report.
Not surprisingly, then, customers are significantly more satisfied with their auto finance companies if they deliver strong digital customer experiences on their websites and mobile apps than customers of other lenders, according to the J.D. Power 2024 U.S. Automotive Finance Digital Experience Study.
However, many auto lenders are falling behind other industries in delivering engaging digital customer experiences while many aren’t keeping up with their peers either. J.D. Power found:
- Just 2% of websites and apps provide comprehensive digital experiences, which meet the criteria for delivering valuable user features including ability to verify payoff amounts, view account balance and select payment amount.
- 40% of automotive finance customer digital experiences do not meet the most basic standards for modern design, problem-free operation and ease of navigation.
- Non-captive apps outperform captive apps, however only non-captive Chase Auto outscored captive GM Financial in customer satisfaction with auto lending digital experiences.
Leveraging tech to deliver digital experiences
Auto lenders can quickly and easily catch up with demand for digital billing, payment and account management options with cloud platforms for customer communications management and electronic bill presentment and payments. They take little time to get up and running while requiring minimal IT support.
Omnichannel CCM software lets companies create personalized billing statements, payment confirmations, adverse action letters and other communications for digital delivery including email and text messaging as well as for mail delivery. A single system simplifies managing all communication channels while taking advantage of synergies, such as sending payment reminders by text with links to online statements or payment portals.
EBPP systems give consumers the ability to manage and pay their accounts online. With the self-service convenience and ease of use that consumers want, borrowers can:
- View statements and payment history
- Make one-time payments
- Automate recurring payments
- Accept a variety of payment methods including debit, ACH and PayPal
Digital options are critical to reducing barriers to payment through accessibility, ease of use and convenience. While ACH deductions from bank accounts remain their first payment choice for auto loans and leases, debit cards are second with younger buyers and subprime auto buyers, according to the 2024 ACI Speedpay Pulse Auto Trend Report. ACI also found that alternative methods, including PayPal and Apple Pay, are gaining ground.
With EV buyers leading the way, auto lenders that offer digital financing as well as electronic billing and payments options have a competitive advantage. Cloud-based CCM and EBPP technologies make it possible to meet growing digital expectations while simplifying the complexity of managing multiple communications and payments channels. They are key to delivering excellent billing and payment experiences not just for digital-first customers but all customers.
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