Shopping for a vehicle comes with all kinds of stressors for a consumer — some of which can affect their relationship with the dealer and lender. The decision to require a shopper to undergo a credit verification can be stressful for many consumers — for different reasons.
Some consumers are worried about the score that will come back on the other end. Some are worried if the score will be high enough to qualify them for the car or truck they’re really hoping to get. Others aren’t so much worried about the score that will come back, but they are worried that the act of running their credit will “ding” their credit a little.
A soft pull credit check is like a simple background check, allowing the dealer and lender to review a shopper’s credit score and financial standing without impacting their credit score.
Soft pulls are important to dealers and lenders for multiple reasons. Perhaps a shopper is unsure if they can afford a specific car or truck because of reduced cash flow during the pandemic. A soft pull can alert them to their status if they’re pre-approved before moving forward with financing options.
Soft pulls can strengthen consumer confidence and trust in making the right decision, and since they aren’t locked into anything, they can resume shopping and even assess varying price ranges. They can also be beneficial to those who may be a little less confident about their credit standing. Perhaps they acknowledge their credit is poor, but their vehicle has broken down and don’t have to worry about having their credit “dinged” while reviewing exactly what they can afford next.
Soft Pulls Are a Necessity With Digital Retailing
Sure, for all these reasons, dealers and lenders should be offering soft pulls. However, when you consider the era of digital retailing we’re now in, soft pulls are no longer a preference — they’re a must.
Research from SalesForce says that in a survey of 7,000 consumers, 53% would share personal data in exchange for a personalized shopping experiences1. Why is this important? Because today’s digitized car shopping process is all about personalization.
This means soft pulls combined with a “credit-first strategy” are imperative to the success of every dealer and transaction today. A fully personalized digital retailing system requires accurate monthly payment quoting — early in the shopping process. Everything from vehicle selection, financing, credit eligibility, and trade-in valuations can affect a person’s payment composition. Obtaining credit at the beginning of the digital retailing process ensures a true personalized shopping experience that will help close more deals.
Credit-First and Soft Pulls Work Together
The right credit-first strategy, combined with a soft-pull approach, is now enabling more seamless transactions in today’s digitized world of sales. Soft pulls work in concert with the credit-first approach and do not require a customer’s date-of-birth or social security number. With just the customers’ name and address, soft-pulls allow an early-stage snapshot of the customers’ credit profile, and insights into their buying power before you start building any deal.
With interest rates changing more frequently right now, establishing the right credit tier and payment options early in the shopping process will benefit everyone involved and build more trust into the process. There is nothing worse than a customer assuming or estimating the payment in his or her mind throughout the transaction process, only to learn just how much changed interest rates may affect the final deal inside the F&I manager’s office at the end.
Where Soft Pulls Benefit Other Areas of a Dealership
Aside from today’s digital shopping process, soft pulls can also benefit dealers in the service lane. Combined with solutions that include equity calculators, smart dealers are now easily integrating these features into their daily workflows to build additional conquest opportunities.
These additional tools built with soft-pull technology are helping dealers and service managers offer quick valuation calculations to show customers how and where it might make sense to consider a new vehicle on the lot compared to the repair bill. This certainly benefits the customer to make a wise decision, but it also helps dealers discover a customer that may not originally be theirs, along with additional used and pre-owned inventory.
Trying to build a digital retailing system for your dealership without soft-pull technology is like building a car without tires. It might look nice, but you won’t get anywhere anytime soon.
Ken Hill is managing director for 700Credit, the a provider of credit reports, compliance, identity verification and soft pull products.
READ MORE: Awards nominations sought
Originally posted on Auto Dealer Today