Auto Loans

Why/What/How : AutoLoanSalesperson and Customer Problems in AutoLoan

CONTENTS1. What is Loan.2. Why should customers go for Loan.3. What is Auto Loan.4. How Auto Loan Works.5. Options for getting Auto Loan.6. Common Terminology used in Loan.7. Salesperson Problems.8. Customer Problems.9. Proposed Mobile App Solutions for Salesperson10. Major features of App.11. Access Modes of App

What is Loan ?

Loan is an arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some point(s) in future time.

Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan.

Why should customers go for Loan ?

Even though it’s the best practice to stick to purchases that you can pay for from your own wallet. Even if you have no trouble buying your weekly groceries, or a couple of meals at restaurants, but you might have trouble buying larger purchase. The cost of a new bike/car, for example, is usually going to be something that people are unable to afford when taking only their actual savings into account.

If you find yourself dealing with this kind of problem, it’s time to get a loan.

What is Auto Loan ?

An auto loan is basically a loan that you take out in order to purchase a vehicle. With an auto loan, you are not paying on the depreciation of the vehicle like you do with a lease. You are paying on the vehicle purchase price plus interest.

How Do Auto Loan works ?

Most auto loans are simple interest loans. Your monthly payment is made up of two important parts-

1. Principal, the actual amount you borrowed to buy a vehicle.

2. Interest, the fee paid to the lender for borrowing the principal.

Payments can include a larger amount of interest at the beginning of the loan and then switch to a larger amount of principal as you get closer to the payoff date.

Options for getting an auto loan

Dealerships – Offering vehicles and loans under one roof, they’re convenient places for finance but rates may be higher than other options.

Banks and credit unions – The opening hours of these brick and mortar premises may not be as convenient as dealerships and online lenders, but they offer low-pressure environments to seek financing.

Online lenders – These financial institutions provide both a convenient and low-pressure way to apply for and obtain an auto loan at competitive rates.

Common Terminology used in Loan

Application Fee : Some lenders may charge an application fee for their alternative loans. This is a fee charged to process the application. It is usually not taken from the principal of the loan and must be paid when you apply for the loan, regardless of the loan amount.

Capitalization : Adding interest that has accrued onto the loan principal. Subsequent interest then begins to accrue on the new principal.

Co-signer :Any individual who will assume responsibility on the loan, but who will not take a title interest in the property nor occupy the property.

Default : Being in default is defined differently for different loans. Basically, it means being delinquent in repaying a student loan more than a certain number of days or failure to comply with any of the other terms of the promissory note. Generally missing one payment does not mean the borrower is in default.

IT IS IMPORTANT NOT TO DEFAULT ON YOUR LOAN.

Deferment : This means that the payments on the principal of the loan will be delayed for a specified time. However, the interest must be paid or it is added to the principal. This means the loan will cost the borrower more in the long run, but it may make the loan easier for the borrower to repay.

Down Payment:(Margin Money Received[MMR]) The difference between the purchase price of real estate and the loan amount. The borrower is responsible for providing the funds for the downpayment.

Interest Rate : This is a percentage of the loan amount that you're charged for borrowing money. It is a re-occurring fee that you're required to repay, in addition to the principal. The interest rate is always recorded in the promissory note.

Annual Percentage Rate (APR): A percentage rate that reflects the amount of interest earned or charged.

Loan-to-Value (LTV) Ratio: The ratio of the principal balance of a mortgage loan to the value of the securing property, as determined by the purchase price or Appraised Value, whichever is less.

Maximum Time to Repay : The promissory note will state the maximum time that the borrower can take to repay the entire loan. Read the promissory note carefully.

Minimum Payment : This is the smallest amount of payment that will be acceptable to the lender. Even if the loan is small, the borrower must make the minimum payment each month until the loan has been fully repaid.

Origination Fee : Processing the loan application and setting up the actual loan for disbursement to the borrower is called "originating" the loan. Some lenders may charge origination fees.

Payment Consolidation : The monthly payments for several loans are combined into a single monthly payment or bill. The loans are still separate, but the payments are divided between the loans. The monthly payments are the total of all the separate payments. Check with your servicer or lender to see if this option is available.

Servicing : Servicing means taking care of the loan after the money is disbursed and until the loan is completely repaid. Many times servicing also means holding the record of the loan even after it has been repaid. Servicing includes -

1. Billing the borrower.2. Recording payments.3. Keeping track of the amount of money left to be repaid.

Sometimes the lender will change servicers or sell the borrower's loan to someone else who uses a different servicer.

Salesperson Problems

1. How to find customers who need Loans?2. Need to manage complete list of benefits provided by lender?3. Require calculator to calculate loan data, like - interest

rate/month, LTV, APR, etc...4. Need to report office each day for updates.5. Difficult to manage customer data on paper. Chances of data

loss.6. It’s difficult to track own performance.7. No idea about the interest rates of competitive lenders.

Customer Problems

1. Difficult to understand complex terms of loans.2. Not able to compare different loans provide by various

lenders.3. It’s not easy to get in touch with salesperson for

further discussion. For this customer have to go at the bank/dealers office.

Proposed Mobile App Solutions

1. App will be a handy solution for salesperson(S.P.) as well as for customers.

2. App will have two modes - Guest Mode and SP Mode.3. For S.P. credentials will be required for authentication. These

details will be provided by the respective Lender.4. App will have guest mode for customers, to record their interest

in particular vehicle for loan.5. App will provide solution for both 2 wheelers and 4 wheelers as

there is huge difference in the policies and interest rates of both.

6. Loan calculator will help S.P. to calculate the quotation, exchange rate of owned vehicle, on-road price, send quotation.

7. App will help S.P. to answer all the vehicle related queries in much better way by the graph and other representation of data.

8. S.P will be instantly updated/Notified whenever any changes in policies are there or any offer has arrived.

9. Customer will be contacted by the S.P. by call or email.

10. Customer can choose lender as per best budget and interest rate.

11. Customers can request online for Brochure and testdrive for any suitable vehicle.

Access Modes of App

Guest Mode

1. Guest mode is for customers who are interested in getting loan.2. Customers will be able to submit their responses along with their contact details -

mobile/email.3. Not required any login.

SP Mode

1. For salespersons to store and update customer data and other private data.2. S.P. can get customers response and can contact them.3. Need username and password to login and access SP mode.

Major features of App

App will have below main features-

1. Loan Calculator.2. Loan Maximizer.3. Insurance Details.4. CRM.5. TestDrive requests.6. Vehicle Brochure(e-book) sharing with customers.7. Easy switching between 2 wheelers and 4 wheelers options.8. Scanning customer DOCs and update in CRM.9. App will have two modes : 1. Guest mode 2. SP Mode.

Thank You