Credit scores aren’t always fair, and sometimes young buyers and buyers with limited credit histories get stuck with higher interest rates because of arbitrary rules. Ford’s working to make financing fair by using new technology to better assess individuals’ creditworthiness.
A New Model
Ford Motor Company is partnering with ZestFinance to use machine-learning credit approval models to enhance its credit lending practices at Ford dealerships throughout the U.S. Machine learning dives deep into data and evolves over time as it learns how to recognize patterns and changes in patterns. The result is an accurate and adaptive model for assessing credit risk that can result in qualified buyers locked out of credit by current models obtaining financing.
Ford will soon begin using the Zest Automated Machine Learning Platform, which analyzes a multitude of data points to create a more accurate assessment of risk for potential borrowers. The ZAML platform incorporates data collection and assimilation, machine learning modeling tools, and transparency utilities. The transparency utilities help lenders explain their credit decisions.
Ford has long been an industry leader in making smart credit decisions that preserve the company’s financial interests while providing fair and honest financing to customers. Ford’s partnership with ZestFinance aims to make that record even better, expanding the pool of eligible borrowers.
In recent years, recovering incomes and nearly record-low interest rates have fueled a massive boom in car buying. Americans bought 17.55 million cars and trucks in 2016, up from 17.5 million the previous year. Ford has ridden this wave, hitting decade-high sales figures in 2016. Continued growth in consumer confidence could easily result in another year of record sales in 2017.
Adapting to Millennials
Credit is absolutely essential to car sales. About 84.5 percent of auto consumers use financing via a loan or a lease to acquire a new vehicle. The average amount financed for new cars is around $26,526. Loans typically average about $457 in payments over a 65-month term for new automobiles.
Many potential customers are locked out getting credit or forced to settle for high-interest rate loans. Nearly one in ten American adults have no credit record, making it almost impossible to extend them credit under traditional underwriting models. This population includes many millennials, who are among the fastest growing segment of car buyers. Last year, millennials made 29 percent of all new car purchases, and that number is set to grow to 40 percent within two years.
The automobile manufacturer that best serves millennials will have a marked advantage over its rivals as they come to dominate the economy as the baby boomers once did. Ford’s move to better accommodate the credit needs of millennials puts it on strong footing with this all-important segment of consumers.
Millennials and credit-challenged buyers seeking a fair shake from a car dealership should visit Indianapolis Ford dealers at Community Ford. Community Ford’s top-notch finance department works with consumers to find the best financing possible for new and used vehicle purchases.