At NADA 2020 in sunny Las Vegas, host Jim Fitzpatrick was joined by Pete MacInnis, CEO of eLEND Solutions.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: eLEND Solutions, you guys are knocking the cover off the ball in the area of financing, helping dealers make it a seamless process, right. From the time the customer clicks on to the time they walk in to the time they drive out. Talk to us about that. For the dealers, the few dealers that don’t know eLEND Solutions, what’s your elevator pitch?
Pete MacInnis: Okay, so for eLEND Solutions, what we’re really trying to do is bring digital finance to the front of the sales process. Right?
Jim Fitzpatrick: Right, right.
Pete MacInnis: Because it’s all been siloed forever.
Jim Fitzpatrick: That’s exactly right.
Pete MacInnis: Consumers want to know as much about payments as they do price.
Jim Fitzpatrick: That’s right.
Pete MacInnis: And so today, they’re basically being quoted a payment, not necessary the payment.
Jim Fitzpatrick: That’s right.
Pete MacInnis: And so our goal, mission is to bring that forward and say, “Look, can we get the customer first pencil, first time, whether it’s online, BDC or in store, and get them a payment terms that’s a fundable contract with the lender as early in the sales process as possible?”
Jim Fitzpatrick: Yeah. That’s pretty strong. Right. So there’s no surprises. And you had mentioned that they want to know the price as much as they want to know the payment. I would suggest that sometimes many, many consumers want to know the payment even more so, right? Because I’m a payment buyer when I buy a car. I’m not so much concerned about the sale price as I am the payment. Right?
Pete MacInnis: Correct. Right. Yeah.
Jim Fitzpatrick: So, and then I really want that dealer to be able to dish up a pretty accurate payment, not one that’s going to be fluctuating all over the place by the time I-
Pete MacInnis: Yeah, so what happens a lot is you have customers quoted a payment… Like, you see all the advertised pricing, “Hey, 60 months, 299. 299 a month.” Right?
Jim Fitzpatrick: Right
Pete MacInnis: On tier one, approved credit. Right?
Jim Fitzpatrick: Yeah, yeah.
Pete MacInnis: With the average lender having nine credit tiers. Right?
Jim Fitzpatrick: Right. That’s right.
Pete MacInnis: Then you’ve got all the pricing adjustments or permutations of that, after the fact. So they start out, everybody gets that payment, we’ll figure it out later. It perpetuates the distrust and the friction with the consumer from an expectation standpoint.
Jim Fitzpatrick: Yeah. That’s right. Right. And crushes customer experience. Right?
Pete MacInnis: Right.
Jim Fitzpatrick: Yeah, unreal.
Pete MacInnis: So we’re trying to resolve that, bring that forward.
Jim Fitzpatrick: Sure. Sure. Talk to us about digital retailing survey. I know you guys are into that. So talk to us a little bit about that.
Pete MacInnis: Yeah. So you know, we’re not… in terms of, we’re not a digital retailing platform, but we have a digital finance component that can empower that. Right?
Jim Fitzpatrick: That’s right.
Pete MacInnis: And in essence, solving what we just talked about, right?
Jim Fitzpatrick: Yeah. Yeah.
Pete MacInnis: And so, we’re doing that. And so obviously, we did the survey with dealers across the country. And some of the interesting results… because we do it annually, and our whole purpose is to make sure we’re in alignment with their expectations, their needs, helping them solve their problems and also the feedback they’re giving us from their customers. And some of the biggest issues or complaints they have about the process is exactly this. It’s about payments, about giving them wrong payments or inaccurate payments upfront in the process.
Jim Fitzpatrick: That’s right. That’s right.
Pete MacInnis: So that was kind of the intent of it. It’s like we’re bringing these solutions, is it in alignment? So what was really interesting about it is we’re asking you about digital retailing today versus just a year ago. The coalescing around a common understanding of what digital retailing is and what that means. So when you look at it from a consumer’s perspective, we kind of look at it as a three legs of the stool. You want to do the vehicle, pricing, negotiation, understand their trade-in, and then get an idea of what their finance terms are.
Jim Fitzpatrick: That’s right.
Pete MacInnis: There’s three pieces. So when we ask the dealers the questions, they basically had three things as well that they’re coalescing around now. It’s basically saying, what we need is we want to have technology, people, and process, and we need all three together and they need to be in sync and in alignment with each other.
Jim Fitzpatrick: Yes, they do.
Pete MacInnis: So each site has basically three core elements that they’re trying to accomplish. The consumer really wants to really know what he’s doing when he gets to the store, and he wants his information to transition seamlessly from online to in store, and not have to start over, all over.
Jim Fitzpatrick: That’s very important.
Pete MacInnis: … It very frustrating when that happens in store.
Jim Fitzpatrick: I know. I know.
Pete MacInnis: So they really just want to get there with affirmations, confirmations of their online expectations.
Jim Fitzpatrick: That’s right. No surprises. T.
Pete MacInnis: That’s the alignment the want, no surprises. And that’s where we’re trying to help. So for us, we’re trying to remove some bottlenecks and disconnects and profit leaks for the dealer. But we’re very focused on it with the survey and the thing that the pinpoints their issues. We’re saying, “Look, don’t be afraid, process is not a dirty word.” It’s okay to change process. But with the dealers, it’s them…. then they’re getting this understanding, it’s like, can technology remove the things that get in the way of what they do best, selling cars and making money.
Jim Fitzpatrick: That’s right. That’s right.
Pete MacInnis: So if we can help take the minutia out of the equation and streamline… Take the customer and from the moment they go for test drive, bring all this data forward and in 60 seconds, you can get down to negotiating a fundable deal-
Jim Fitzpatrick: That’s phenomenal.
Pete MacInnis: … just from a…
Jim Fitzpatrick: In anticipation of today’s interview with you as I often do, I spoke to one of your clients. And he said, “There’s so many companies out there, like Vroom and Carvana and CarMax, that have been doing this and are doing this now, here in this space where they can get so accurate on a payment right up front with their customers. Why couldn’t we?” He said, “enters eLEND Solutions and guess what, now we can.” So it’s really taken your client in this case… has taken him to the forefront and given him a huge advantage over his competition. Have you found that to be the case with your clients?
Pete MacInnis: Oh yeah. So when you look at those, some of the success in the customer experience and truly they’re having, because they can stand behind it.
Jim Fitzpatrick: That’s right.
Pete MacInnis: They got their own financing arms, so they’re able to do that. So what we want to do is basically take lender programs and get really… When you think about nine credit tiers for a lender and they’re all being quoted on tier one when there’s nine.
Jim Fitzpatrick: Yeah. Exactly.
Pete MacInnis: Then there’s pricing bumps. Okay, if you’re over a hundred percent loan to value, you’re going to have 150 basis points for the last six tiers, all that kind of stuff.
Jim Fitzpatrick: You know these guys. There’s somebody sitting in the back room laughing, that’s never spent any time in finance or a showroom floor that comes up with all these tiers. That go, “Are you kidding me? Let’s see if they jumped through all these hoops.”
Pete MacInnis: Well, here’s the interesting part too, and it’s not just credit tiers, think about this, a 700 credit score, you can have two 700 credit scores. One you just got out of college and he’s a user on their parent’s account.
Jim Fitzpatrick: Oh my gosh. I know. I know, one credit card.
Pete MacInnis: And they’re working at McDonald’s, and they’re going out trying to buy a nice car. He’s not the same thing as you with the same credit score.
Jim Fitzpatrick: That’s right. That’s right. That’s crazy.
Pete MacInnis: And so, there’s so many different attributes and things that change payment and terms, the loan to values and payment to income, debt to income ratios, the advanced front-end, advanced back-end advance of dealer [inaudible 00:06:09]. How about bringing and letting the dealer know when you’re quoting a payment, how much money is going to make on the deal? Is he going to get a flat fee for 150 bucks, 200 bucks? Or is he going to make $842 on the deal?
Jim Fitzpatrick: Wow. That’s nice. I do.
Pete MacInnis: That’s matters if you can bring that forward, and that’s what we’re doing. We’re letting the dealer have the transparency of understanding how much money they’re going to make in finance on the deal, if they structure it that way in the front of the process.
Jim Fitzpatrick: Are you touching… I know you guys are launching DealMaker at any day here. Is that what you were just talking about?
Pete MacInnis: Yes, that is our DealMaker product. Yes.
Jim Fitzpatrick: So talk to us a little bit about that.
Pete MacInnis: Yes. So it’s a rules-based, credit-decision engine that enables all of what I was just saying. So we can take a waterfall of lenders, and stack them with all of their rules and guidelines and things. So think about those traditional, digital rate sheets. They have them in a binder and in a book. We digitize all of that.
Jim Fitzpatrick: Nice.
Pete MacInnis: So we can then pinpoint absolute best case, lowest payment for the customer. Or they can say, “Well, show me where my max participation is.” And if I can get the customer, then you can roll back in between. And so the rollback functionality of the desk and component is-
Jim Fitzpatrick: Beautiful. That’s great.
Pete MacInnis: … It’s tied to the engine. So if you change the tier, it’ll automatically change-
Jim Fitzpatrick: That’s really nice.
Pete MacInnis: … the interest rate for you, the corresponding rate for that and let you know if either the program or the customer is out of alignment with the deal.
Jim Fitzpatrick: Because how many deal… I was a desk manager in the industry, and how many times did you… you’re going to the books and you checking it, and you screw it up, you quote the payment, and then the customer gets in the box and they’re like, “Jim, where did you come up with this?” “Oh, I picked up the wrong…” So if you’re making that a seamless process.
Pete MacInnis: Right. Well see, then it’s also between the dealer and the lender as well. So we’ve already talked about how solving problems for them. So [inaudible 00:07:42] about between dealer and lender, what we found in talking to them is the biggest friction between the dealer or lender, contracts and transit. Because they might’ve written a certain rate or a term-
Jim Fitzpatrick: That’s right, get trade back.
Pete MacInnis: … all of a sudden the trade, they thought they were a LTV, now the trade in bumped them out of whack. And you just added 150 basis point to the rates. And they didn’t do it, they sent the contract in. Right?
Jim Fitzpatrick: Right, right.
Pete MacInnis: So it’s a lot of friction and a lot of dollars being held up in cash–
Jim Fitzpatrick: Or the F&I guy set up so much in finance reserve, to your point, they go up. Your buy rate’s a lot higher than what you put in. So you thought you were getting a thousand bucks back, you’re only getting a hundred.
Pete MacInnis: Correct.
Jim Fitzpatrick: And we’ll cash the contract, but you’re not making what you’re going to make.
Pete MacInnis: So those contracts that are getting hung up in funding for days because someone made a mistake somewhere along the way. Why? Because a lot of times, they don’t have the information available to them, or the lenders program is becoming so complicated and complex, it’s really difficult for them to keep up. That’s guys working eight deals on a Saturday. Right?
Jim Fitzpatrick: Yeah, forget it.
Pete MacInnis: How do you do that?
Jim Fitzpatrick: Oh my God.
Pete MacInnis: And you’re spending 20 minutes trying to figure that out while the customer’s sitting there being the patient. Well, what if we can do that in milliseconds? So that’s how we’re trying to help them with that process.
Jim Fitzpatrick: This question is kind of silly. I’ve got it written down here, but because I know we’ve talked about all of these things already. But if you had to point to one or two things that makes eLEND different than maybe some of the other players in the space, if there are any that compete with you, what would those be?
Pete MacInnis: It’s so interesting. Somebody made this comment to me yesterday at the show. They said, “Pete, it’s so interesting to hear your story, what you guys are doing and you’ve been around so long, there’s so many startups. They’re building a startup. You’re really a startup business. You’re actually building a business, and you’ve been doing it for a long time.” And–
Jim Fitzpatrick: 10 years, right?
Pete MacInnis: Oh, it’s been 15 years now.
Jim Fitzpatrick: 15 years. Oh my gosh. Yeah. That’s incredible.
Pete MacInnis: So it’s been a journey and an evolution, just like the interest rate. We’ve been… We did the legacy online, interactive credit stuff, we pioneered those things and now we moved into identification solutions.
Jim Fitzpatrick: Wow. That’s awesome.
Pete MacInnis: And boy, are we catching a lot of fraud– dealer, some big dealer rifts of that.
Jim Fitzpatrick: You were telling me, yeah, just the other day when we were talking about that. And that’s really impressive. You had some stories that… They were like eight or nine different situations at one dealership that–
Pete MacInnis: We have one… In one geographical market in the last eight months, our product stopped 21-
Jim Fitzpatrick: 21. Oh my God.
Pete MacInnis: … fake driver’s license IDs for purchases, 11 of those arrested on property.
Jim Fitzpatrick: That’s pretty impressive. Wow. And you know and I know that if you didn’t catch them and those transactions happen, guess who’s eating the contract, if in the event the bank finds out that they’re fraudulent?
Pete MacInnis: It’s coming back to the dealer.
Jim Fitzpatrick: They’re coming back to the dealer, one way or another. Right?
Pete MacInnis: Right.
Jim Fitzpatrick: One way or the other, either the dealer is going to pay for the full amount of the contract or the bank’s going to go, we’re not to buying any deals from that dealership anymore.
Pete MacInnis: Right. So twofold, we’re trying to get… not only get to the customer to a fundable payment terms, penny perfect to a fundable contract, but we’re also making sure there’s a lot of fraud pulled out of that equation as well.
Jim Fitzpatrick: Yeah. That’s right.
Pete MacInnis: So if you take care of that, along with the streamlining, taking hours out of the sales process. So we’re we’re just trying to help the dealers get where they want to go, and the dealers are wanting to get there.
Jim Fitzpatrick: So a strong 2020 ahead for your company.
Pete MacInnis: It’s going to be very exciting this year for us. Yeah.
Jim Fitzpatrick: That’s awesome.
Jim Fitzpatrick: Pete MacInnis, eLEND Solutions. For dealers that are watching right now, you owe it to yourself, and I’ve said this before, but you owe it to yourself and your dealer group to look into eLEND Solutions. If you don’t have a solution in this problem, based on the discussion that Pete and I just had, give him a call. And let him do a little analysis of your dealership and take it from there. But I know you’re going to be impressed with what you see. eLEND Solutions, Pete MacInnis, thank you so much. It’s always a pleasure, man.
Pete MacInnis: Thanks, Jim.
Jim Fitzpatrick: Thanks. Hope you have a great show.
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