JD Power-Nomis deal helps lenders adjust auto loan policy on the fly

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A recent collaboration between pricing analysis provider Nomis Solutions and JD Power could help auto lenders quickly revamp their interest rates and dealer incentives for a competitive edge.

JD Power will allow lenders using its PIN Navigator tool to feed retail transaction data into Nomis’ Price Optimizer platform, Nomis announced in November. PIN Navigator collects information on what Nomis said are more than 70 variables related to franchise dealer sales in a specific region. Nomis’ Price Optimizer helps lenders interpret this data and adjust their underwriting based on market conditions.

“With information as recent as the past 72 hours, lenders can identify emerging trends and make real-time pricing decisions,” Nomis wrote in a Nov. 11 press release announcing the deal with JD Power.

The announcement highlights the potential for rapid improvement in underwriting policies facing F&I managers.

Prashant Balepur, senior vice president of Nomis products, said it was the first time his company had received automotive market insights. He called the JD Power data “the ‘freshest’ information available to lenders today,” typically arriving 24 to 48 hours after the dealership transaction.

balepur said Automotive News that auto lenders have “always been pretty nimble” and will review their prices daily. But this process is labor intensive when handled by traditional means, he said.

Nomis’ platform and integration with JD Power streamlines and automates this process, according to Balepur. He said the resulting pricing decisions can be fed into a dealership management system.

“Given the volatile sales environment, combined with an expectation of rising interest rates, the ability of banks, captives, credit unions and independents to provide accurate and competitive auto finance offers, all simultaneously maintaining profitability, has never been more critical than it is now,” Nomis CEO Frank Rohde said in a statement Nov. 11. “Nomis Price Optimizer helps them do just that. Now paired with JD Power’s expansive auto finance dataset, this strategic collaboration positions our organizations to provide even greater real-time transparency, front-line pricing insights and actionable recommendations for today’s highly competitive auto loan market.”

Lenders have increased their profitability by 10 to 25 basis points using the Nomis platform, Balepur said. The company believes JD Power’s information should add several more basis points to that.

“With Nomis engaging with select JD Power customers early on, we’ve seen firsthand how powerful Nomis modeling is and how our real-time data can work together to benefit customers,” Mike Buckingham, JD Power chief executive of PIN Auto Finance, said in a statement.

Nomis reports overpriced fares for a market as well as underpriced fares, Balepur said. According to Balepur, resolving these imbalanced pockets leads many of its lending users to an “up and to the right” situation where profitability and volume increase.

Nomis helps the lender establish their initial price argument for the client. But lenders can also use the software to optimize a dealership’s incentives, such as flats or margin, and JD Power’s insights can help with that, Balepur said.

Balepur said another application of its technology would be to “reduce the back and forth” that occurs when a dealer and lender negotiate loan terms to make the deal work. For a borrower, it’s “the most uncomfortable time,” he said. Instead, a bank’s counteroffer could be tailored by software rather than requiring a human underwriter, he said.

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