Perhaps artificial intelligence isn’t quite yet the silver bullet to solve all challenges within auto financing and retailing.

The latest snapshot survey of auto dealers and finance companies orchestrated by eLEND Solutions found that 90% believe that AI-based pricing is contributing to inaccurate online payment quotes. The majority also said that’s having an adverse impact on the car-buying experience.

The survey revealed other key obstacles to delivering accurate online payment quotes, cited by survey respondents, include a reduction in lender transparency, mistimed and mismatched desking/finance company decisions, and reliance on consumer-provided credit scores, all of which are contributing to payment quotes that are anything but “penny perfect,” according to eLEND Solutions.

“Over three-quarters of dealers and lenders in our survey say that the desked-deal and final decision match 50% or less of the time,” said Pete MacInnis, founder and CEO of eLEND Solutions.

“That is an astonishing number, but one that doesn’t surprise us. This mismatch, born of multiple factors uncovered in our survey, creates deep friction in the buying process, impacting CSI, profits and more,” continued MacInnis, who also is among the experts scheduled to appear during Cherokee Media Group’s Auto Intel Summit + National Remarketing Conference that runs April 23-25 in Cary, N.C.

MacInnis pointed out that hurdles to generating accurate payment quotes is the lack of relevant, objective information driving online payment quotes.

According to 64% of dealer and finance company respondents, today’s online quotes are primarily driven by consumer-provided credit score information.

MacInnis explained what that factor coupled with a faulty perception of what “penny-perfect payments” in digital retailing created within the survey results.

Those results indicated that 76% of respondents said digital retail payment quotes match final underwriting decisions less than 25% of the time. And only 4% said they match more than 50% of the time.

Complicating matters even more, MacInnis said more than half of finance companies and dealers report through the survey that payment terms are negotiated with the online customer before an underwriting decision.

“Talk about putting the cart before the horse,” MacInnis said in a news release. “Negotiating payment terms before a lender decision is a recipe for consumer dissatisfaction and deal rewinds.”

In fact, eLEND Solutions found that 70% of respondents agree that having finance involved in the deal flow prior to the first pencil, digitally or otherwise, would improve the process for all parties.

The snap survey was conducted by eLEND Solutions online among more than 300 auto dealers and finance companies in December. While the survey respondents were predominantly auto dealers (76% dealer/24% finance companies), MacInnis said the results were extraordinarily consistent across both cohorts.

“It was important for us to hear from lenders in this survey and it was remarkable how in sync they were with dealers: for example, the vast majority of both segments agree that not only has there been a reduction in lenders providing critical rate sheet pricing bulletins (87%), but also that AI-based pricing is a key culprit of inaccurate payment quotes (90%),” MacInnis said.

Survey results also highlighted that finance companies and dealers also appear to be aligned in what it will take to solve these challenges.

The findings indicated 94% said that pre-desking technology, integrated with finance company proprietary credit scorecard models, would improve the car buying/selling experience for all parties.

“The challenges to today’s digital finance are solvable, but only when our industry is willing to come together to change processes, increase transparency and embrace tools that enable sales and finance to begin together at the start of the transaction,” MacInnis said.

“The last time we saw disruption around lender dealer communication was 20 years ago when the big players got together to eliminate the ‘faxes’ between dealers and lenders. The results of this survey clearly demonstrate that the time for collaboration on the next big disruption has come,” he went on to say.

MacInnis elaborated about those assertions and more during an episode of the Auto Remarketing Podcast recorded at NADA Show 2024 in Las Vegas. That can be heard through the window at the bottom of this page.

And to get you ready for that conversation, here are the other key takeaways from the latest eLEND Solutions survey:

—86% of respondents think inaccurate online digital retailing payment quotes have an adverse impact on buying experiences. (89% dealers/84% of finance companies)

—90% of respondents say that AI based pricing at the customer qualification level (rather than legacy credit tier band pricing}, is contributing to inaccurate online payment quotes. (91% dealers/85% finance companies)

—The digital retailing term “penny perfect payments” means “payments tied to jurisdiction sales tax, license and registration fees,” for 57% overall. Only 43% said “payments tied to jurisdiction sales tax, license and registration fees,” plus actual customer pre-qualified to a specific finance lender decision.” Finance companies were more likely to say the latter (52%) than dealers (42%)

—Customer-provided credit score estimate is the feature that most commonly powers initial online digital retailing payment quotes, according to 64% of respondents; ‘actual FICO scores’ (17%), and ‘basic calculator tools’ (15%) lagged far behind, with “actual lender decisions” last at 4%

—Initial digital retail payment quotes match final lender decisions less than half the time say 96% of respondents, with 76% saying they match less than 25% of the time. (74% dealers/79% finance companies)

—87% overall agree that has there been a reduction in Lenders providing rate-sheet pricing bulletins (89% dealers/83% finance companies)

—Finance company pricing models are predominantly driven by ‘credit score plus other credit attributes and advance guidelines’ say 66% of dealers and 57% of finance companies.

—54% overall say that payment terms are negotiated with the online customer before the underwriting decision

—The desked deal matches final finance company decisions less than 50% of the time say 72% of respondents

—74% agree that having finance involved in the deal flow prior to the first pencil, digitally or otherwise, would improve the process for all parties, with dealers indexing higher (78%) on this factor than finance companies (69%)

—94% overall say that pre-desking technology, integrated with lender proprietary credit scorecard models, would improve the car buying/selling experience for all parties. (94% dealer/92% finance company)